The sentence against Mohammed Dahlan was handed down by a West Bank court in March but was not made public until today, in the official Palestinian Authority newspaper. There was no explanation for the delay.
The magistrate's court convicted Dahlan, who is based in the United Arab Emirates, of defamation and slander because he alleged in an interview in October that Palestinian security forces help protect Israeli settlers in the occupied West Bank.
The complaint against Dahlan was filed by six top security commanders loyal to Abbas and was widely seen as a political maneuver.
Analyst Abdel Majed Swailim said the court ruling was part of Abbas' campaign against Dahlan.
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"It's clear that President Abbas decided to get rid of him (Dahlan)," said Swailim. "It's going to be much more difficult for Dahlan now, after this court ruling, to play any role in the Palestinian political life."
Dahlan, a former Gaza security chief-turned-businessman, was close to Abbas for years, but was banished in 2010 after suggesting the Palestinian leader's two adult sons profited financially from their father's position.
At the same time, there have been signs that Dahlan is positioning himself for a future leadership battle.
A first test would be the convention of Abbas' Fatah movement, tentatively scheduled for August, where a new leadership is to be chosen.
The two-year sentence imposed on Dahlan would make it less likely for him to attempt a return to the West Bank, even though he could try to appeal.