Even a suspended sentence would bar him from running for president next year.
An outspoken critic of President Vladimir Putin, Mr Navalny has denied the accusations, saying the case is politically motivated.
A sentence in the retrial, ordered after a ruling by the European Court of Human Rights, may take hours to be read out.
Prosecutors had asked the judge to hand Mr Navalny a five-year suspended sentence.
Who is he?
Mr Navalny, 40, is known for his anti-corruption campaign, which targeted senior officials close to the Kremlin. He says the case against him is an effort to keep him out of politics.
He had recently stepped up his political activity after announcing plans last year to run for the presidency in 2018. Mr Putin is allowed by the constitution to run for a second consecutive six-year term, but he has not said yet if he plans to do so.
Mr Navalny`s rise as a force in Russian politics began in 2008 when he started blogging about alleged malpractice and corruption at some of Russia`s big state-controlled corporations.
He described the president`s United Russia as "the party of crooks and thieves", a phrase that stuck among many in Russia. He stood for Moscow mayor in 2013 and got more than a quarter of the vote, a surprise for many.
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