The complex case centres on a fake list of account holders from the Clearstream financial clearing house, who were said to have received kickbacks from the sale of French warships to Taiwan.
Sarkozy's name was on the list and the French president alleges the scandal was fabricated to tarnish him during his campaign for the party's nomination ahead of the 2007 vote, which he won.
'Accomplice through silence'
Prosecutors argued that while de Villepin had not deliberately taken part in the plot - known as the Clearstream affair - he had failed to take action to stop the conspiracy and was an "accomplice through silence".
They demanded a sentence of three years in jail - with all but 18 months to be suspended - for co-defendant Jean-Louis Gergorin, a former aerospace executive who leaked the bogus list to investigators.
Jean-Claude Marin, the lead prosecutor, said de Villepin "became an accomplice by endorsing through his silence the actions taken by Jean-Louis Gergorin".
But de Villepin's lawyers said the sentencing appeal was unfair, given that the prosecutors had acknowledged that the former prime minister had not been an active participant in the conspiracy.
"We have just made it illegal to do nothing," Olivier Metzner, de Villepin's lawyer, said.
The request from the prosecution was less than the maximum five years allowed under the law for a conviction on charges of complicity to slander, complicity to use forgeries, dealing in stolen property and breach of trust.
Prosecutors called for a two-year sentence with six months to be suspended for Imad Lahoud, the man who has admitted to adding Sarkozy's name to the fake list.
The trial, which has gripped France, opened a month ago. Sarkozy is one of the 39 civil plaintiffs in the case.
De Villepin has several times accused Sarkozy of pursuing a personal vendetta against him and in his testimony last month said that Sarkozy had shown a "relentlessness to destroy a political adversary".
The trial ends on Friday but judges are not expected to announce a verdict before January.