But prosecutors said Sollecito held her down while Knox stabbed her to death.
The pair committed the killing with small-time drug dealer Rudy Guede, 22, who was jailed for 30 years for murder and sexual violence last October.
Police are still not certain why Knox, Sollecito and Guede were all at the house together, but they suspect it involved a drugs transaction.
They cornered Miss Kercher in her room and began some kind of sex game which ended with her being held down while Knox cut her throat with a six-inch kitchen knife.
AT THE SCENE
Matt Cole, BBC News, Perugia
The courtroom was packed as the judge and jurors filed in. Despite the numbers a complete hush fell on the room as the lead judge began to deliver the verdict.
Amanda Knox stood looking down as she learned her fate. At first there seemed little reaction, then she turned and buried her head into the chest of her lawyer. It was then that her head and shoulders began to shake as sobs came.
The eldest of Amanda's sisters, Deanna, had been crying even before the verdict. Her cries worsened once she learned the verdict of her sister. In contrast, Raffaele Sollecito stood almost impassive as he learned his future.
As the full verdict was read out, the gaze of each of the six jurors seemed almost fixed to the court's back wall from where a crumbling fresco of the Virgin Mary and Child looked down.
Only occasionally did those who decided the fate of Knox and Sollecito allow their gaze to flick to those who they had found guilty.
Knox's father, Curt, stood emotionless throughout. He only moved when his eldest child had been led away, surrounded and supported by blue-capped prison guards.
Afterwards they tried to make the death look like part of a failed burglary, breaking the window in Miss Kercher's room to look like forced entry. But police realised it had been done from the inside.
Knox's odd behaviour after the body was found also aroused suspicions - she was reported to have performed a cartwheel and done the splits while waiting to be questioned by police.
After the judge read the verdict to a hushed court, Knox buried her head in her lawyer's chest and sobbed.
Her sister Deanna wept uncontrollably as Knox was led out of court crying.
Miss Kercher's family lawyer, Francesco Maresca, said they were satisfied with the verdict.
He said: "They got the justice they were expecting. We got what we were hoping for.
"With what we got with the Guede sentence last year, we have obtained truth and justice for this tragic event."
The Kercher family are due to hold a press conference at a hotel in Perugia at 1000 GMT.
Knox's family, meanwhile, left court in tears, fighting through the crowds of journalists gathered outside.
A spokesman for Knox's parents said they would immediately start the process of appealing against her guilty verdict.
In a statement, Curt Knox and Edda Mellas said: "Amanda is innocent and we will continue to fight for her freedom... we are extremely disappointed.
Miss Kercher had been studying Italian on an exchange programme
"While we always knew this was a possibility, we find it difficult to accept this verdict when we know that she is innocent.
"The prosecution has failed to explain why there is no evidence of Amanda in the room where Meredith was so horribly and tragically murdered."
They also criticised the media for the way their daughter had been portrayed, claiming this had an effect on the verdict.
They said: "It appears clear to us that the attacks on Amanda's character in much of the media and by the prosecution had a significant impact on the judges and jurors and apparently overshadowed the lack of evidence in the prosecution's case against her."
In Seattle her grandmother, Elisabeth Huff, added: "They didn't listen to the facts of the case. All they did was listen to the media's lies."
The court ordered Knox and Sollecito to pay one million euros to Miss Kercher's mother and the same amount to her father.
Amanda Knox's father and sister 'do not accept' the verdict - Courtesy 20/20, ABC
Her siblings would each receive 800,000 euros, the court ruled.
Knox was told she must also pay 40,000 euros compensation to local barman Patrick Lumumba, for falsely accusing him of the murder.
Miss Kercher, from Coulsdon, had been sharing a house with Knox, also a student, on her year abroad in the Umbrian hilltop town.
The trial of Knox and Sollecito started on 16 January this year.
The jury deliberated for 13 hours before reaching its verdict.
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