Greg Gianforte attacked the journalist in May 2017 on the eve of a special election that he went on to win.
He pleaded guilty to assaulting the Guardian reporter but avoided jail time and instead was told to undergo community service, anger management therapy and pay a fine.
Referring to the incident in front of a crowd in Missoula on Thursday evening, Mr Trump said “I had heard he body-slammed a reporter” before adding that he was initially concerned that the altercation would lead to Mr Gianforte losing the vote.
“I said, ‘Wait a minute. I know Montana pretty well; I think it might help him.’ And it did.”
“Anybody that can do a body-slam,” the president added, “that’s my kind of guy.”
Mr Trump also jokingly warned the crowd to “never wrestle” the congressman.
At the time, Mr Gianforte pleaded guilty to the misdemeanour assault on Ben Jacobs and was given a 180-day suspended sentence, was required to do community service, pay a fine and to attend anger management classes.
A 2017 investigation into the assault included interviews with members of a Fox news crew who said Mr Gianforte had been angry with Mr Jacobs over what he perceived as biased coverage.
Witnesses said that the politician then body slammed Mr Jacobs onto the ground before punching him.
The Washington Post columnist, who was based in the US, went missing after visiting the Saudi consulate in Istanbul.
US intelligence officials say Mr Khashoggi was most likely killed by Saudi officials.
“To celebrate an attack on a journalist who was simply doing his job is an attack on the First Amendment by someone who has taken an oath to defend it,” said John Mulholland, the editor of The Guardian US, in a statement issued on Thursday night, after Mr Trump had finished speaking.
“In the aftermath of the murder of Jamal Khashoggi, it runs the risk of inviting other assaults on journalists both here and across the world where they often face far greater threats.”
A Guardian article about the US president’s remarks described the comments as the first time he had “openly and directly praised a violent act against a journalist on American soil”.
The rally was part of a campaign blitz by Mr Trump, who is seeking to raise support for Republican Party candidates in the upcoming midterm elections.
While speaking the president portrayed the vote as a referendum on his first 21 months in office.
Mr Trump is also looking ahead to his re-election campaign in 2020, for which he has already raised over $100m (£77m).
Despite his remarkable fundraising, political commentator Joe Scarborough said he did not think Mr Trump would seek re-election.
“He didn’t want to be elected president, he didn’t think he would be elected president,” the co-host of MSNBC’s Morning Joe said during an interview on The Late Show with Stephen Colbert.
“He didn’t even think he was going to get the Republican nomination. He’s going to cash out.”
“He’ll get money from the Saudis. He’ll make money from Putin when he gets out, that’s why he’s been Putin’s lapdog. Donald Trump is all about money.”
During his appearance in Montana the US president frequently veered off topic and reminisced about his 2016 election victory, a common theme in his speeches.
Additional reporting by agencies