The spy, known only by his pseudonym Issac Bental, was also barred from entering Switzerland for five years.
Sentencing judge Hans Wipraechtiger called his crimes a "callous violation of Swiss sovereignty."
Bental's defence had argued for an acquittal, saying he had acted to protect Israel's strategic interests.
But the Federal court disagreed and found him guilty of political espionage, illegal acts for a foreign state and entering the country under a false name.
Prosecutors had demanded a 15-month jail sentence.
Bental was arrested with other Mossad operatives as they tried to install a listening device in an apartment block in Berne in 1998.
He was subsequently allowed to leave Switzerland after Israel paid $2m bail and promised that he would return for the trial.
Target
The target of the botched operation was a Swiss citizen of Lebanese origin, who Mossad thought had links with Hezbollah Islamic extremists.
March 1999: Retired agent convicted of fabricating reports suggesting Syria was about to attack
February 1998: Agents caught installing bugging equipment in Berne
September 1997: Failed attempt to assassinate head of Hamas in Jordan
He also denied any knowledge of the July 1994 bombing of a Jewish community centre in Argentina that killed 86 people.
On Wednesday, Mossad agents threatened to refuse missions in protest at what they see as a lack of backing from their superiors.
Sources in the secret service told Israeli Radio they were "angry and greatly frustrated" that Mr Bental was handed over by Israel for the trial.
The agents said they expect to receive the backing of the Mossad leadership, even if the missions to which they were assigned failed.