David Drummond, Google's chief legal officer, Peter Fleischer, its global privacy counselor, and George Reyes, the former chief financial officer, were handed suspended six-month prison sentences after they were convicted of the privacy violations in connections with the video, which was online for two months in 2006.
They were acquitted on charges of defamation, along with Arvind Desikan, the former head of Google Video Europe, who was only facing the charge of defamation.
"The right to enterprise cannot take precedence over the individual's right to dignity," prosecutor Alfredo Robledo told reporters after the verdict was announced.
A Google spokesman expressed shock at the conviction of three company executives and said the three men intended to appeal.
"This verdict is a great disappointment. It attacks the very principles of freedom of expression on which internet was built," said Google spokesman Bill Echikson.
None of the convicted executives had even been aware of the existence of the controversial bullying video at the center of the trial, Echikson said.
"Our responsibility is to remove illegal content once we are notified. There is an important question of free speech here. If this principle passes then the Web as we know it will cease to exist."
The Google spokesman dismissed the suggestion that the effect of the ruling by Judge Magi was largely symbolic, since sentences under three years are automatically suspended for people without a prior criminal conviction.
"You tell Pete Fleischer it's just a suspended sentence. It means these people will have a criminal record," he said.
"We will support these employees all the way through the appeal process. It's not just for Google but for the entire internet."
The ground-breaking legal pronouncement followed the posting of the distasteful video in the "fun videos" section of Google Video in September 2006.
It was taken down two months later, after receiving 5,500 visits, as a result of an official complaint by the charity ViviDown, which represents the interests of Down Syndrome sufferers.
The charity became involved because one of the handicapped boy's tormentors made a joking reference to the organisation in the video.
Google lawyers argued at the trial that the company did not have editorial responsibility for the content carried on its platforms and that it had immediately removed the offensive material once it had been brought to its attention via the correct official channels.
They said Google and other internet companies' activities would be crippled if they were held responsible for the illegal acts of third-party users.
And they stressed the fact that Google had collaborated with Italian investigators to help identify the perpetrators of the bullying as soon as the company was officially notified about the problem.
Guido Camera, the lawyer representing ViviDown at the trial, said he was very pleased with the outcome, despite the fact that neither his client nor the Milan City Council, also admitted as an injured party at the trial, had been awarded damages.
The victim of the bullying episode withdrew from the case shortly after the beginning of the year-long trial after receiving an apology from Google.
"It's a very important result because it establishes that a privacy violation had indeed taken place and that privacy is one of the fundamental rights of the individual," Camera said.
"In his summing up the prosecutor described privacy as the habeas corpus of the future and said it required adequate protection. This verdict demonstrates that privacy must be protected, whether we are talking about the president of the United States or a handicapped teenager."
The outcome was also welcomed by Prosecutor Alfredo Robledo.
"This trial wasn't about freedom of the internet, as some people have said. Instead, for the first time in Italy, there has been a discussion of the serious question of the rights of the individual in today's society," Robledo said.
"The rights of a business enterprise cannot take precedence over the dignity of the individual."