Sharif's daughter Maryam Nawaz was sentenced to seven years in prison while her husband Captain (retd) Safdar was given one-year jail in the case filed by the National Accountability Bureau, Dawn online reported.
Sharif, who is in London with his ailing wife, was not in the courtroom for the verdict and was sentenced in absentia.
The ruling came weeks before the general elections in Pakistan on July 25.
With the conviction of both Maryam Nawaz and Capt Safdar in the case, they stand debarred from contesting the upcoming Parliamentary elections in Pakistan which will dampen the hopes of PMLN which was planning to make a comeback to power.
Prosectution lawyer said that Sharif has been asked to pay a fine of 8 million pounds ($10.6 million) and Maryam was fined 2 million pounds.
"It is based on injustices".
"We reject this decision", Shahbaz Sharif told a televised press conference in Lahore shortly after the verdict.
Sharif was disqualified from office previous year by the Pakistan Supreme Court, which declared him "dishonest" for not disclosing a separate monthly income from a company owned by his son. He denies drawing the monthly salary.
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Mr. Nawaz Sharf, a three-time Prime Minister, was removed as head of the Pakistan Mulsim League-Nawaz (PML-N) by the Election Commission following his disqualification by the Supreme Court.
Sharif had denounced the court proceedings against him as politically motivated and a judicial witch-hunt, often suggesting the hidden hand of the military was to blame.
"Standing up to hidden powers who have ruled the country for nearly 70 years!"
1999 - Overthrown in a military coup by General Pervez Musharraf, the country's fourth army takeover since independence in 1947.
Sharif has argued that the military, in cahoots with top judges, has used cases against him and party members to tip the scales in favor of cricketer-turned-politician Imran Khan ahead of the election.
Khan is running on a socially conservative, anti-corruption platform.
The PML-N has termed the trial political victimisation.
The Supreme Court agreed to investigate the Sharif family's finances after Khan threatened street demonstrations to protest graft.
"A political bigwig has been sentenced to imprisonment for the first time in Pakistan's history", he remarked while talking to media.