Bagosora, 67, and the two senior military officers were found to have organised, trained and armed the Interahamwe militia, which was responsible for most of the killing.
They were also responsible for drawing up a list of Tutsis and moderate Hutus who opposed their vision of an ethnically pure Rwanda.
The International Criminal Tribunal for Rwanda (ICTR), based in Tanzania, rejected the defence's argument that the killing was not organised, and therefore not genocide.
Bagosora's lawyer, Raphael Constant, said his client would appeal against the verdict.
Brigadier Gratien Kabiligi, the former chief of military operations, who was on trial with Bagosora and the two other men, was cleared of all charges and ordered to be released from custody immediately.
In another verdict on Thursday, the tribunal sentenced Protais Zigiranyirazo, 57, to 20 years in jail for his part in the genocide.
Mr Zigiranyirazo, a brother-in-law of former President Juvenal Habyarimana, was accused of ordering Hutus to kill 48 people in two incidents.
The Rwandan government said it was "satisfied" with the court's decision to impose a life sentence on Bagosora.
The Rwandan representative to the ICTR, Aloys Mutabingwa, said "justice has been delivered" but added that the acquittal of Kabiligi was "surprising".
"The court ruled that Bagosora had the authority over the killers. It is the most important thing... There can never be genocide without planning," he said.
Prosecutors said Bagosora assumed control of military and political affairs in Rwanda when President Habyarimana's plane was shot down in 1994 - the catalyst for the genocide.
However, the indictment alleges that he began planning the massacre as far back as 1990.
Theoneste Bagosora on trial with three others
409 trial days
30,000 pages of transcripts
242 witnesses heard
300 written decisions
Most material translated into French, English and Kinyarwanda
The following year, Bagosora helped draft a document circulated within the army that described Tutsis as "the principal enemy".
Canadian General Romeo Dallaire, head of UN peacekeepers in Rwanda at the time, described Mr Bagosora as a "known extremist" and the "kingpin" behind the genocide.
Bagosora has been in custody since 1996, when he was arrested in Cameroon where he was in self-imposed exile.
The trial, which began in 2002, was expected to last two years.
The tribunal, which has come to play a key part in the process of justice and reconciliation, has so far convicted 34 people and acquitted six others.
Twenty-three remain on trial and eight trials have yet to begin before the tribunal winds up next year.
The effects of the genocide are still being felt in the region, in particular across the border in the Democratic Republic of Congo.
Some of the Hutu militias involved in the genocide fled to DR Congo, where Tutsi rebels, allegedly with some Rwandan backing, refuse to lay down their arms, saying they are being attacked by the Hutu fighters.
Some 300,000 people have fled their homes in DR Congo this year because of this conflict.
• Correction: An earlier version of this story displayed an image and video clip of a defendant identified as Theoneste Bagosora. In fact both showed pictures of another defendant, also sentenced to jail for his part in the genocide. We apologise for any confusion.
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