The incident, one of Japan's deadliest in recent decades, killed mostly young artists and shocked the anime world.
Shinji Aoba, 45, pleaded guilty to the attack but his lawyers had sought a lighter sentence on grounds of "mental incompetence".
Judges rejected this however, ruling that Aoba knew what he was doing.
"I have determined that the defendant was not mentally insane or weak at the time of the crime," Chief Judge Masuda said on Thursday at Kyoto District Court.
"The death of 36 people is extremely serious and tragic. The fear and pain of the deceased victims was indescribable," Japanese broadcaster NHK reported him saying.
Many of the animation staff - young artists - were killed after being trapped on the upper floors of the studio as the fire spread.
The attack was one of the deadliest cases in recent decades and sparked national mourning in Japan. The country's public and media have followed the case closely.
Prosecutors had demanded the death penalty for Aoba, saying he was motivated to attack the studio after believing his work had been stolen. He said Kyoto Animation - known as KyoAni- had plagiarised a novel he entered into their contest.
In July 2019, he burst into the studio during a work day, splashing petrol on the ground floor and setting it alight while repeatedly shouting "Drop dead".
He later said during his guilty plea in September 2023 that he did not think so many people would die.
"I felt I had no other option but to do what I did," he said at the time.
"I feel tremendously sorry and the feeling includes a sense of guilt."
Aoba himself suffered burns to over 90% of his body in the fire, and was only arrested after he had recovered from operations.
"The delusion that KyoAni Studio had plagiarised his work influenced his motivation," prosecutors had told the court.
On Thursday, the judge read out a lengthy reasoning with victim testimonies before announcing the verdict. More than half of the animation studio's 70-strong workforce was killed in the event, and another 32 injured.
"Some of them saw their colleagues engulfed in flames, and some of them are suffering from psychological effects, and they are tormented by feelings of guilt and remorse," said Judge Masuda.
Families of the victims were seen in the court room, with many visibly emotional as the judge read out the details of Aoba's crime, NHK reported.
The outlet reported that Aoba kept his head bowed as the judge read out the death penalty sentence.
Japan retains capital punishment for its most serious crimes, like multiple murders. Those convicted typically remain on death row for years, or even decades. The death penalty is conducted by hanging.
The KyoAni studio in Kyoto is a beloved institution, known for producing films and graphic novels that are well-regarded by fans as well as critics - including K-On! and The Melancholy of Haruhi Suzumiya.
Source: BBC News, Frances Mao, January 25, 2024
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