The 46-year-old presidential hopeful and flamboyant former minister was found guilty of "illicit enrichment" and fined the equivalent of more than 210 million euros ($230 million).
He was however cleared of the main corruption charge by a special anti-corruption court in Dakar.
The verdict was met with cries of dismay from dozens of Wade's supporters inside the courtroom, with some breaking down in tears. Several lawyers told AFP that Wade could appeal the sentence.
There was tight security in the building with police and gendarmes deployed both outside and inside.
The sentence comes just two days after the opposition Democratic Party of Senegal (PDS) choose Karim Wade as its candidate for the country's next presidential election. The poll date has yet to be set.
Senegal's President Macky Sall, who beat Karim Wade's father in a 2012 election, had warned that his government would stifle any unrest provoked by the court ruling.
He has been in custody since April 2013, while justice officials investigated claims he abused his position to accumulate vast riches.
Prosecutors had sought a seven-year prison term.
Wade denies the charges, and his supporters -- led by his father -- claim the trial is politically motivated.
After a successful career in finance in the City of London, Karim Wade returned to Senegal two years after his father's 2000 presidential victory, and was soon tapped for a series of increasingly important public positions.
He was also chosen to head the National Agency for the Organisation of the Islamic Conference (ANOCI), which successfully oversaw the transformation of Dakar in time to host the 11th Islamic Summit of 57 Muslim countries in 2008 -- but was also criticised for a lack of financial transparency.
Backed by his father, Wade was also selected to oversee the construction of a new international airport in Dakar, the restructuring of Senegal's chemical industry and the creation of a special economic zone.
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