By a vote of 9 to 1, the panel of five Republicans and five Democrats agreed with chief committee counsel R. Blake Chisam, who had recommended the penalty. It also recommended that Rangel be required to pay restitution on unpaid taxes.
The full House must now vote on whether to approve the penalty or impose a different one.
"We have worked hard together in this matter in a way that has been actually quite wrenching," said committee chairwoman Rep. Zoe Lofgren, D-Calif. "We are satisfied to be concluded."
If the House votes to approve the sanction -- a simple majority is needed -- Rangel would then be forced to appear in the well of the House, where members stand when they address the chamber, and hear the charges against him read by the Speaker of the House.
The penalty of censure is reserved for "more serious" offenses, according to House rules, and is the most stringent punishment Congress can impose short of expulsion.
Rangel, 80, once the powerful chairman of the House Ways and Means Committee, stood silently before the committee as chairwoman Lofgren read their decision.
He then said again he hoped the committee would make "abundantly clear" in its report to the full House that he hadn't benefitted personally from his wrongdoing.
On Tuesday the committee found Rangel guilty of 11 of 13 ethics charges, ranging from improper fundraising, inappropriate possession of multiple rent-controlled apartments and failure to pay taxes on a vacation home.
Rangel's censure by the ethics committee is only the fourth time such a penalty has been imposed in committee history. It has rendered four expulsions, three censures and 9 reprimands.
The House most recently censured Rep. Gerry Studds in 1983 for inappropriate sexual behavior with a congressional page.
Earlier Thursday, the committee grappled openly with the appropriate penalty for Rangel.
"It was our responsibility to determine whether Rep. Rangel met that standard [of keeping the public trust]. We did so fairly, honestly and without bias," said committee chairwoman Rep. Lofgren. "When a member has been found to violate ethical standard, that member must be held accountable."
Rep. Jo Bonner, R-Ala., the ranking Republican on the committee, said he respected Rangel for his decades of service in the House but chided him for his behavior.
"Mr. Rangel should only look into the mirror if he wants to know who to blame," Bonner said. "I know, and I believe we all know, that it should not take either a law degree or a legal dictionary to determine the difference between right and wrong."
Rep. John Lewis, D-Ga., who was not a member of the committee but made a surprise appearance in support of Rangel, defended a man he called "friend, colleague, brother."
"He came to Selma, [Ala.], and he walked with many of us, including Dr. Martin Luther King," said Lewis. "He sponsored and passed progressive legislation ... Charlie Rangel is a good and decent man. I know this man. I think I know his heart."
Later, before the committee adjourned to deliberate his fate, an emotional Rangel fought back tears as he stood to apologize for putting his peers in what he called an awkward position.