The Seoul court passed a two-year sentence suspended for three years on Hwang Woo-Suk after convicting him of embezzling research funds and of ethical lapses in obtaining human eggs for experiments.
It found him not guilty of defrauding private entities that contributed funds to his research.
Prosecutors had demanded a four-year jail term for Hwang, who went on trial in June 2006, and said they would appeal the ruling that he is not guilty of fraud.
Judges said he had known that his team "exaggerated or manipulated" some experiments, although they found no evidence he directly instructed them to do so.
The 56-year-old Hwang, who was impassive as the verdict was read, still retains a loyal following. He later smiled and shook hands with supporters inside the courtroom who clapped and shouted "Doctor Hwang, cheer up!"
Another crowd of about 100 supporters outside applauded Hwang as he walked out through a crowd of journalists. The court received petitions from 55 lawmakers and others calling for leniency.
The scientist said his lawyers would decide whether to appeal.
Hwang shot to fame in 2004 when he published a paper in the US journal "Science" claiming to have created the world's first stem-cell line from a cloned human embryo.
In a follow-up paper in 2005 in the same journal, he maintained that his team had developed 11 patient-specific embryonic stem-cell lines.
The claims raised hopes of new treatments for diseases such as cancer, diabetes and Parkinson's.
The government showered Hwang and his team from the prestigious Seoul National University (SNU) with money and honours. Hwang was awarded the title of "Supreme Scientist".
But his reputation was tarnished in November 2005 by allegations that he had violated medical ethics by accepting human eggs from his own researchers.
Hwang apologised for the lapse but the scandal widened with reports from local television network MBC that his entire research was fabricated.
In January 2006 an SNU investigative team ruled in a report that his findings were faked and said he had produced no stem cells of any kind.
Hwang was also found guilty of breaching a law on bioethics which bans illegal human egg transactions. "Hwang and his team failed to prove that they were not involved in illegal trading of human eggs," the verdict said.
The judges said Hwang had misappropriated a combined 830 million won (704,000 dollars) in research funds by using borrowed bank accounts or manipulating tax bills.
But they said he did not do so for personal profit.
Hwang's work in creating Snuppy (Seoul National University puppy), the world's first cloned dog, has been independently verified.
While on bail during the trial, he focused on animal cloning after losing his government licence for human stem-cell research.
"His brilliant achievements in animal experiments, his sincere repentance and the fact he was already disciplined by his school should be considered," the judges said.