Otto Warmbier was sentenced in a one-hour trial at the country's Supreme Court to 15 years of hard labour after he was convicted of subversion.
The University of Virginia undergraduate student allegedly attempted to take a propaganda banner from his hotel in North Korea's capital, Pyongyang.
Mr Warmbier had been visiting as a tourist and was staying at the Yanggakdo International Hotel before being arrested while trying to leave the country in early January.
Announcing his detention, North Korea said Mr Warmbier had committed an anti-state crime with "the tacit connivance of the US government and under its manipulation".
Mr Warmbier made a statement before his trail where he said he wanted the banner "as a trophy" for the mother of a friend at his church, the Friendship United Methodist Church, in Wyoming.
The 21-year-old also said he was offered a used car worth $10,000 (around £7,000) for the banner with the promise of $200,000 (around £142,000) being paid to his mother as a charitable donation if he did not return.
He claimed he had accepted the offer because his family was "suffering from very severe financial difficulties", however, people detained in North Korea often recant public statements following their release.
Americans are strongly advised by the State Department against visiting North Korea but travel to the secretive nation is legal.