He said: "Irving has, for his own ideological reasons, persistently and deliberately misrepresented and manipulated historical evidence."
The judge found that Mr Irving was "an active Holocaust denier; that he is anti-Semitic and racist and that he associates with right wing extremists who promote neo-Nazism".
Mr Irving, the 62-year-old author of Hitler's War, is facing ruin over a defence costs bill of £2m following Mr Justice Gray's ruling.
Prof Lipstadt said: "I feel exceptionally vindicated in what has been five years of excruciating effort on my part.
"I see this not only as a personal victory, but also as a victory for all those who speak out against hate and prejudice."
Mr Irving said he was "flabbergasted" and called the ruling perverse. He was refused leave to appeal by the judge although he may be allowed to apply directly to the Court of Appeal.
He told the BBC: "It's my fault. I failed to convince the judge, not because my documents were wrong but I was not articulate enough.
"I assumed he was following more closely than I think he was."
'Manipulated evidence'
The controversial historian brought the libel action because, he said, his reputation had been damaged by Prof Lipstadt and his livelihood threatened as a result.
But after considering the case for almost four weeks, Mr Justice Gray ruled against Irving, concluding that the defence of justification succeeded.
He said: "Irving has, for his own ideological reasons, persistently and deliberately misrepresented and manipulated historical evidence."
He added "for the same reasons he has portrayed Hitler in an unwarrantedly favourable light, principally in relation to his attitude towards and responsibility for the treatment of the Jews".
'Hitler partisan'
In her book, Ms Lipstadt, who is Professor of Modern Jewish and Holocaust studies at Emory University, Atlanta, Georgia, described Mr Irving as "one of the most dangerous spokespersons for Holocaust denial".
She questioned his claim to be a historian at all and described him as a "Hitler partisan" who had distorted history.
Mr Irving said he brought the action over free speech and "personal prestige and reputation" and alleged that his livelihood had been threatened because publishers would no longer take his work.
'Right wing views'
Mr Irving said that he had never claimed that the Holocaust did not occur, but did question the number of Jewish dead and denied their systematic extermination in concentration camp gas chambers.
But the defence team told the court that Mr Irving was a racist who held extreme right wing views and sought to exonerate Hitler.
After the ruling, Mr Irving left the courtroom accompanied by High Court security staff.
He made his way through the rear entrance of the Law Courts and sped away in a taxi.
He was not wearing his suit jacket in court because he was hit on the back by an egg on his way into the building where anti-Nazi protesters had gathered.