At its peak, the judge said, the site was the 13th most popular on the internet, accounting for 4 per cent of all online traffic.
In 2010, it is estimated Dotcom earned US$42 million, Ortmann US$9 million, Van der Kolk US$2 million and Batato US$400,000.
But the Crown said that money was earned through spreading copyright-infringing material around the globe.
Judge Dawson agreed there was an "overwhelming preponderance of evidence" that there was a case for the quartet to answer.
"That Mr Dotcom has a different view than the US of the internet does not have the hallmark of political persecution," the judge said.
Earlier he dismissed three applications made by the defendants for a stay of the proceedings.
Midway through a two-month hearing, lawyers had argued they had been deliberately "starved" of funds with which to mount an effective defence to the allegations.
They also said the Crown had a conflict of interest and was guilty of an abuse of process.
Judge Dawson disagreed.
When he announced the men were eligible for extradition, Batato's wife, Anastasia, broke down in tears and was consoled by a similarly tearful Asia van der Kolk, whose husband was also before the court.
The judge told the defendants they had 15 days to lodge an appeal or apply for habeas corpus and there was an immediate indication by their lawyers that an appeal would be sought.
They were given until February 12 to file a draft case for that hearing.
Dotcom's US lawyer Ira Rothken tweeted after the judgment.
Because of the "change of circumstances" prosecutor Christine Gordon, on behalf of the US Government, said bail should be revisited.
Judge Dawson granted bail on the existing terms, which meant the men would still have to report to their local police station twice a week.
After the decision, Kim Dotcom took to Twitter to thank his followers for their support.
The ruling comes after almost four years of legal wrangling after a dramatic police raid on Dotcom's north Auckland mansion in January 2012.
Dozens of police, including New Zealand's elite anti-terrorism police unit, carried out a dawn raid arresting Dotcom, Batato and Ortmann.
The other defendant, Bram van der Kolk, who like Dotcom has permanent residency, was arrested at his upmarket Orakei home.
The FBI warrant sought the four on a range of charges relating to the Megaupload business, from criminal copyright violation through to money laundering and operating an organised criminal conspiracy.
If found guilty in the US, the men could face lengthy jail terms.
Dotcom timeline
"If I win the extradition then we deport. If he loses we don't have to deport. It's Plan B, right? They're waiting for the decision, if I'm eligible for surrender."
The extradition case saw Crown lawyers, acting for the US, present evidence supporting the claim Megaupload operated intentionally as a filesharing site intended to aid and reward the distribution of copyrighted material.
Dotcom and the other defendants rejected the claims, saying they told users not to upload infringing material and that a service was offered to copyright holders - and used by them - to have infringing links removed.
Lawyers for the defence also maintained the offences on which the US want him extradited are not extradition offences, claiming the case had been put forward as a large fraud to get to the necessary benchmark.
Justice Minister Amy Adams this afternoon said the first step after the judgment was to wait and see if it was appealed.
"If it is not then I will need to consider the court's determination and receive advice from the Ministry of Justice on the relevant issues under the Extradition Act.
"As the court's decision may be appealed, it would be inappropriate for me to comment further at this time."
Under the Extradition Act 1999, both the courts and the minister have roles in an extradition process.
Ms Adams said the role of the court was to consider whether the evidence established there was a case to answer.
"The Justice Minister determines whether any of the matters set out in the Extradition Act apply such that extradition should not be ordered.
"However, I haven't begun to turn my mind to that question. Such a decision would not arise until after the conclusion of any appeal of the legal finding that the respondents are eligible for extradition."
