Hossam Khader, who represents the northern West Bank city of Nablus, was sentenced after being found guilty of "transferring funds to a terrorist organisation", an Israeli military spokeswoman said on Sunday.
He is the second Palestinian MP to be jailed by Israel after fellow Fatah deputy Marwan Barghuti received five life sentences last year for anti-Israeli attacks.
Khader was arrested in 2003 in Nablus and later charged with funding and having links to a banned "terrorist" organisation.
Prosecutors alleged during the course of his trial, which began last year, that Khader had given members of the al-Aqsa Martyrs Brigades money to buy equipment such as bullets and bulletproof vests.
One member of the al-Aqsa Brigades signed an affidavit claiming that Khader had given him 4000 shekels (about $900) to buy military equipment, but he later said that he had only made his accusation under duress.
The verdict was condemned by the Palestinian Authority and parliamentary leaders as unlawful.
Erikat: There is no legal basis for
the Israeli court judgment
"This is a political judgment as there is no legal basis for any Israeli court to judge a Palestinian member of parliament," chief Palestinian negotiator Saeb Erikat said.
The deputy speaker of parliament, Hassan Khrusheih, said international pressure was needed to overturn the verdict.
"We are calling on parliaments around the world and human rights organisations to condemn this judgment," he said.
"This is an illegal court which has delivered a verdict against all Palestinians as Hossam was elected by the people."
"This is an illegal court which has delivered a verdict against all Palestinians as Hossam was elected by the people"
Deputy speaker, Palestinian parliament
His brother Ghassan said the MP's lawyers had been instructed to begin measures to overturn the judgment.
"It is a political judgment, and we will try with the help of international parliaments, human rights groups and the Palestinian Authority to ensure his release, and we will appeal against the judgment which the court had no right to make," he said.
The al-Aqsa Brigades, an offshoot of the ruling Fatah faction, has been behind dozens of anti-Israeli attacks during the five-year uprising.