In a ruling at the Nagoya District Court, presiding judge Junko Ikadatsu ordered the airline to pay the compensation to 232 plaintiffs.
The court, however, dismissed a damage claim against the European aircraft maker Airbus, despite plaintiffs' claims that the plane had design flaws that led to the fatal crash at Nagoya Airport.
The plane, arriving from Taipei with 271 people on board, stalled and crashed during a landing attempt at Nagoya airport on April 26, 1994. The plane disintegrated as it hit the runway, killing all but seven of the people on board.
"The pilot ignored the most basic, yet the most important, duty. It was just reckless," Ikadatsu told the court. "The relation of cause and effect is clear. China Airlines ought to compensate for all damages."
China Airlines had offered to pay 16.4 million yen compensation per victim, a total of 4.33 billion yen.
The plaintiffs, blaming fatal piloting errors and flawed aircraft design for the crash, had sought a total of 19.6 billion yen in compensation from China Airlines and Airbus, the European plane maker.
Airbus not guilty
Judge Ikadatsu said Airbus should not be held responsible for Japan's second most deadly plane crash.
"It cannot be said that Airbus' design concept for the aircraft lacked rationality and that there was actually a flaw in the design," Kyodo news agency quoted Ikadatsu as saying.
Airbus is owned 80% by European Aeronautic, Defence & Space Co NV (EADS), based in Germany and France, and 20 percent by Britain's BAE Systems Plc.