Ahmed Manasra, 14, was earlier found guilty of the attempted murder of a 20-year-old and a 12-year-old boy in the Jewish settlement neighbourhood of Pisgat Zeev in annexed east Jerusalem.
He was 13 at the time of the October 2015 attack that led to a propaganda war between Palestinians and Israelis, sparked by surveillance footage later released of the incident.
Manasra carried out the attack along with his 15-year-old cousin Hassan, who was shot dead by security forces.
The two Israelis were seriously wounded.
In addition to the jail term, the Jerusalem district court ordered Manasra to pay 80,000 shekels ($21,000, 19,000 euros) in compensation to the adult victim and 100,000 to the boy, the ruling said.
His lawyer Lea Tsemel said she planned to appeal the sentence.
The sentencing and trial were closed to journalists because Manasra is a minor. Prosecutors had requested 12 years.
‘Although the accused was a minor, he tried to harm human life and there is no other option than to give him jail time,’ prosecutor Yuval Keidar told journalists after the sentencing.
Manasra had earlier pleaded not guilty, saying he had not personally stabbed either of the victims and had only intended to frighten them.
The teenager appeared calm as he entered and left the courtroom in east Jerusalem on Monday. His father refused comment, asking journalists to leave him alone.
‘Our defeat, of the legal team, is a very small defeat compared to the wide and deep defeat of both the Israeli society and the court,’ said defence lawyer Tsemel.
She said that ‘everyone talked about the full rehabilitation he is going through. Everyone talked about a kid who's not dangerous at all.
‘And despite this, the court approved the prosecution's claim and gave him the full sentence, plus an unimaginable and not-possible fine.’
- Video prompts controversy -
The incident came at the beginning of a months-long wave of Palestinian knife, gun and car-ramming attacks.
Footage released by Israeli authorities in the wake of the attack purported to show the cousins -- knives in hand -- following the Israeli victims.
It also showed Manasra, who was hit by a car as they fled, lying bleeding on the ground in the aftermath of the attack while Israeli onlookers shouted abuse.
Palestinian president Mahmud Abbas later claimed he had been ‘executed’ while Israel scrambled to release video of him sitting up and eating in a Jerusalem hospital bed.
Since October 2015, violence has claimed the lives of 238 Palestinians, 36 Israelis, two Americans, a Jordanian, an Eritrean and a Sudanese, according to an AFP count.
Most of the Palestinians killed were carrying out attacks, according to Israeli authorities. Others were shot dead during protests and clashes, while some were killed in air strikes in the Gaza Strip.
Most of the attacks were by lone-wolf assailants, many of them young people including teenagers.
Many analysts say Palestinian frustration with the Israeli occupation and settlement-building in the West Bank, comatose peace efforts and their own fractured leadership have helped feed the unrest.
Israel says incitement by Palestinian leaders and media is a leading cause.