The appeal court also ordered a new trial in another court for Baha al-Din Maliji and Hussain al-Owais, MPs for the ruling National Democratic Party in Fayum, south of Cairo.
Maliji and al-Owais were respectively sentenced by the high state security court in February to 15 and five years in prison with hard labour.
In the same trial, a civil servant from Fayum was sentenced to 15 years, a lawyer to eight years, and 10 other defendants were handed prison sentences of between one and five years. Five other defendants were acquitted.
The group, including the MPs, were found guilty of having forged property documents in the Fayum district to claim 162 million Egyptian pounds (about $30 million) from the government for the use of plots of land.
Al-Owais was also accused of having made off with three million pounds (about $500,000) from the sale of the headquarters of the Fayum farmers' union.
However, he returned the sum, which helped to lighten his sentence.
The case is one of a string of high-profile corruption trials in Egypt over the past year, including trials of former ministers and government officials.