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.
"I leave the sanction to all of you," he said. "But there's no way to stretch this that I'm a corrupted individual... There's no excuse for my behavior and there was no intent for me ever to go beyond what was given to me as a salary. I never attempted to enrich myself. And I walk away no matter what your decision, grateful that I had this opportunity to serve."
The political fallout from the sanction against Rangel may not be as intense as expected, since Republicans are preoccupied with taking control of the House in the next Congress, and Democrats are hoping to put the embarrassment behind them.
Still, the sanction will undoubtedly be a stain on the record of a man who has served in the House for 40 years and was forced to relinquish his chairmanship of the powerful House Ways and Means Committee in March.
Rangel has contested the entire proceeding, saying it violated his right to due process, because the committee would not further delay the trial so that he could explore the creation of a legal defense fund to pay his bills.
He stormed out of the proceeding on the first day, saying he couldn't afford an attorney to represent him, even though the committee chairwoman Lofgren said he had had ample time to explore representation.
Later, Rangel released a statement calling the committee's verdict "unprecedented in view of the fact that they arrived at without rebuttal or counter evidence on my behalf."
"It's all very sad," said Melanie Sloan, Executive director of the of the public interest group Citizens for Responsibility and Ethics in Washington. "Somebody who was previously highly respected and beloved has allowed his name to be dragged through the mud."
Rangel, a man who calls himself the "son of Harlem," will now have a footnote to his storied career mentioning the punishment.