The only person jailed for life by the international war crimes tribunal in The Hague has had his sentence cut on appeal to 40 years.
Stakic had a key role in setting up the camps
Milomir Stakic, the 44-year-old former mayor of Prijedor in northern Bosnia, was held responsible for the notorious detention camps set up there in 1992.
Pictures of emaciated prisoners behind barbed wire, reminiscent of Nazi concentration camps, shocked the world.
The appeals court said the original sentence was inappropriate.
It upheld Stakic's conviction for the extermination and persecution of Prijedor's non-Serb population in order to create a Serbian municipality to join a pure Serbian state.
More than 1,500 non-Serbs died in the camps
But it also upheld his acquittal of genocide.
It said the evidence was consistent with the trial chamber's conclusion that Stakic "intended to displace but not to destroy" non-Serbs.
But correspondents say the ruling could mean that Stakic actually spends longer in jail.
His life sentence would have been subject to a review after 20 years, but the 40-year sentence has no such provision.
As a top administrator in the Prijedor region, Stakic, oversaw the setting up of the Omarska, Keraterm and Trnopolje camps, in which more than 1,500 Bosnian Muslims and Croats died.