The ruling risks triggering a new leadership crisis at the International Monetary Fund after Lagarde's predecessor Dominique Strauss Khan resigned in 2011 over a sex assault scandal.
The case could tarnish the stellar reputation of the first woman ever to become finance minister of a "Group of Eight" country.
At the heart of the trial is Lagarde's 2007 decision to allow a dispute over businessman Bernard Tapie's sale of the Adidas sports brand to Credit Lyonnais bank to be resolved by an unusual private arbitration panel, instead of through the courts.
The 60-year-old former corporate lawyer is also accused of failing to challenge the 404-million-euro (US$422 million) award that emerged from the arbitration.
Lagarde argued in evidence on Friday that she had acted in good faith in approving the payment to Tapie to settle the row; saying her sole aim had been "to defend the general interest".
But she has faced accusations in court that the arbitration process was a flawed way to deal with the dispute with Tapie. If convicted, Lagarde could face up to one-year in prison and a 15,000-euro fine.
The IMF has so far given Lagarde its full backing in the case, but the organization would be concerned at any potential damage to its reputation that a conviction would bring.
Lagarde is being tried by the Court of Justice of the Republic — a tribunal staffed by judges and members of parliament that hears cases against ministers accused of wrongdoing in office.
Strain on family
Lagarde's voice cracked with emotion on Friday as she said the trial had put her family — she is the mother of two sons — through a "testing" time.
Prosecutor Jean-Claude Marin has said he believes the evidence is "very weak" and is opposed to convicting Lagarde. Indeed, the prosecutor's office had advised against bringing the case to court.
Lagarde waved through the settlement to Tapie in 2008. The payout raised concerns given Tapie's vocal support for Lagarde's then boss, ex-president Nicolas Sarkozy, and it was subsequently cancelled by the courts.
Tapie had sold Adidas to Credit Lyonnais for the equivalent of 315.5 million euros in 1993. The bank sold it on the following year for 701 million euros, prompting claims from Tapie that he had been cheated.
Lagarde has told the trial she had trusted the judgement of her subordinates in the process and had not been included in some of the negotiations in the ministry and in the president's office.
A member of her high-powered legal team, Bernard Grelon, argued Lagarde could not be held responsible for what happened later. "The fault here is not one of negligence, it is having taken a decision which turned out badly," he told the court.
As IMF chief, Lagarde has been a key player in bailout negotiations for Greece and has also worked to reform the US- and Europe-dominated institution to reflect China's growing global leverage.
Lagarde succeeded her disgraced compatriot Dominique Strauss-Kahn as IMF managing director after he resigned to fight sexual assault charges.
Another former IMF head, Rodrigo Rato of Spain, is currently standing trial on charges of misusing funds when he was head of Spanish lender Bankia.