Although Teitel, 39, argued an angel had controlled him while he committed the crimes, the district court found that Teitel was not insane and was "responsible for his actions," making it more likely he will receive a maximum life sentence.
The court formally delivered its decision Wednesday, The Jerusalem Post reported.
The court accepted a plea bargain made between the district attorney and Teitel's lawyers in May, after he was originally indicted in 2009, The Jerusalem Post said.
Teitel refused to plead guilty in court, although he agreed to admit to the charges, because he did not recognize the court's authority.
In a highly unusual move, Teitel's attorney told the court Teitel admitted to the charges in an amended indictment, The Jerusalem Post said, even though courts normally require the accused to admit guilt in person.
The indictment says Teitel -- dubbed "the Jewish terrorist" -- murdered a Palestinian taxi driver in 1997, as well as a second Palestinian man near a West Bank settlement later that year.
Then, in 2008, he attempted to murder a 15-year-old Jewish girl, the indictment said.