But Mr Trump was found not liable for raping E Jean Carroll in the dressing room of Bergdorf Goodman.
The jury also found Mr Trump liable for defamation for calling the writer's accusations "a Hoax and a lie".
It is the first time Mr Trump has been found legally responsible for a sexual assault.
The Manhattan jury ordered Mr Trump to pay her about $5m (£4m) in damages.
Because the trial was in civil court - rather than criminal - Mr Trump will not be required to register as a sex offender.
The jury of six men and three women reached their decision after less than three hours of deliberations on Tuesday.
Mr Trump - who denied the accusations - did not attend the two-week civil trial in the Manhattan federal court.
Ms Carroll held the hands of both her lawyers as the verdict was read in court and smiled as she was awarded damages by the jury.
Mr Trump's lawyer, Joe Tacopina, shook her hand as the trial ended, telling her: "Congratulations and good luck."
Ms Carroll did not stop outside court, but told reporters "we're very happy" before leaving in a car with her attorneys.
After the verdict, Mr Trump posted on his social media platform Truth Social in all capital letters: "I have absolutely no idea who this woman is.
"This verdict is a disgrace - a continuation of the greatest witch hunt of all time!"
The trial saw a tense cross-examination between Ms Carroll and Mr Trump's attorneys.
Her legal team called 11 witnesses to corroborate her claims that Mr Trump had assaulted her in the lingerie department of the luxury store in 1995 or 1996.
They included two women who also say they were sexually assaulted by Mr Trump decades ago, and two long-time friends of hers who said she told them about the encounter with Mr Trump shortly after it occurred.
On the stand, Ms Carroll described in graphic detail what she alleges happened in the store and the trauma she says she has endured as a result.
"I'm here because Donald Trump raped me and when I wrote about it, he lied and said it didn't happen," she told the court.
Mr Trump called no witnesses and appeared only in a video of a deposition that was played for jurors in which he denied rape.
"It's the most ridiculous, disgusting story," Mr Trump said in the footage. "It's just made up."
Ms Carroll's lawsuit argued that Mr Trump had defamed her in an October 2022 post on his social media site in which he called her claims a "complete con job" and "a Hoax and a lie".
Her legal team argued Mr Trump, 76, had acted as a "witness against himself" during the deposition when he doubled down on comments he made in a 2005 recording.
In the audio, known as the Access Hollywood tape and leaked in 2016, Mr Trump suggested women let stars "do anything" to them, including grabbing their genitals.
That's what he did to Ms Carroll, her lawyer Roberta Kaplan argued. Ms Kaplan is not related to the judge in the case, Lewis Kaplan.