Portillo, extradited to the US from his home country a year ago, pleaded guilty in March to trying to launder through US banks bribes Taiwan paid to Guatemala to get the Central American nation to offer diplomatic recognition to Taipei over Beijing.
The 62-year-old disgraced former leader, who was president between 2000 and 2004, has been detained since January 2010.
Counting time already served, he will only remain in prison another year and a half, according to the ruling by US District Judge Robert Patterson.
Portillo received five checks for half a million dollars each from Taiwan between 1999 and 2002, and then conspired to launder the money.
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Wearing a dark suit in the Manhattan courtroom, Portillo showed no reaction as the sentence was read.
By entering the guilty plea and agreeing to re-pay to the United States the bribes received from Taiwan, he avoided a maximum sentence of 20 years.
Guatemala is one of 22 countries, mostly in Central America and the Caribbean, that recognize Taiwan diplomatically over mainland China.
Taiwan has donated millions of dollars to Guatemala to build schools and roads, and for agricultural projects among other things.
Guatemalan President Otto Perez said yesterday that ties with Taiwan remained strong, and that they "should not be affected by events that happened 14 years ago."
Portillo was the first former Latin American leader extradited to the United States. He admitted conspiring to commit money laundering from 1999 to 2009.