"The Australian government is shocked at the verdict," said Foreign Minister Julie Bishop of the seven-year sentence imposed on the Australian for aiding the blacklisted Muslim Brotherhood.
"We are deeply dismayed that a sentence has been imposed and appalled at the severity of it."
"It is hard to credit that the court in this case could have reached this conclusion," she added.
"The Australian government simply cannot understand it based on the evidence that was presented in the case."
Greste's Al Jazeera colleague, Egyptian-Canadian Mohamed Fadel Fahmy, was also sentenced to seven years, while producer Baher Mohamed received two sentences -- one for seven years and another for three years.
They were accused of "spreading false news".
The three were among 20 defendants in a trial that has triggered international outrage amid fears of growing media restrictions in Egypt, AFP reported.
The severe sentence came despite Australian Prime Minister Tony Abbott speaking to Egypt's new leader Abdel Fattah al-Sisi over the weekend.
Abbott said he had been encouraged about their conversation on Greste.