Chung Mong-koo, 68, was accused of amassing a multi-million dollar slush fund for personal use and to pay lobbyists and politicians.
A spokesman for Hyundai said the ruling was disappointing and an appeal would be filed.
Mong-koo was accused of embezzling £56 million from company affiliates.
Some of the money was allegedly used to pay off politicians and government officials, and also help smooth the way for Mong-koo's son to take control of the auto group.
"The court decided a strict execution of law is necessary to eradicate illegal and anti-market practices in the past and help South Korea build a more advanced economy," Kim Dong-oh, presiding judge at the Seoul court, said.