Following al-Mabhouh's murder, suspicion immediately fell on Mossad, the Israeli intelligence service, but Israel has never officially commented on the killing and has refused to comment on Brodsky.
Anna Mika-Kopec, one of Brodsky's lawyers, said that his legal team has not yet decided whether to appeal.
But she said the ruling could be good for him because his potential sentence is less than what he would face if he were tried and convicted of forgery and spying.
Spying could carry up to an additional five years.
Mika-Kopec stressed that the Warsaw court did not examine the matter of Brodsky's innocence or guilt, focusing only on whether the German request was valid.
The German federal prosecutor's office said it cannot comment on the case because it has not officially been informed of the details of the decision.
Krzysztof Stepinski, another lawyer for Brodsky, said his client would make a decision on whether to appeal after he receives a Hebrew translation of the court documents.
The Brodsky case has put Poland in a predicament because it is an ally of both Germany, its western neighbour and its largest trade partner, and Israel.
Officials refused to comment on the political dimension of Wednesday's ruling, though it appears to be something of a compromise with Poland extraditing him to Germany but ensuring that he will face lesser charges.
Brodsky was escorted into court on Wednesday by masked police officers wielding machine guns.
He wore a navy jacket with a hood that he pulled tightly over his head and covered his face in his hands.
The hearing was held behind closed doors but reporters were allowed in at the end to hear the judge's ruling. The court also extended his detention until September.
Brodsky was arrested on June 4 at Warsaw's international airport, where he had hoped to take a flight to Tel Aviv.