The defendant, Specialist Belmor Ramos, 23, will also be dishonourably discharged from the army. The US military court judge had recommended the soldier be jailed for 40 years but a plea agreement led his term to be drastically reduced.
"Because of the plea agreement, he can serve no more than seven months' confinement," a spokeswoman for the US 7th Army Joint Multinational Training Command, Denver Makle, told AFP.
"As part of that agreement, he will testify in the other remaining trials and cooperate with the military in its investigation."
Ramos was tried with three other US soldiers in Vilseck, southern Germany near Grafenwöhr where their 172nd Infantry Brigade is based.
No further details on the case were immediately available from the court but US media have reported that the group killed four handcuffed and blindfolded Iraqi prisoners with pistol shots to the head beside a Baghdad canal.
The men were apparently Shiite fighters linked to the Mahdi Army militia, which controlled the West Rashid area of southwest Baghdad, the New York Times reported last month. The killings were allegedly in retribution for an attack against the men's unit.
The verdict came one day after the US military said three US soldiers had been charged with premeditated murder committed and obstruction of justice over the same incident.