The court also ruled on Thursday that millions of dollars of compensation awarded to more than 4,000 victims would be managed by a trust fund.
The trial against Habre began in July 2015, though victims and survivors have been pursuing the case against their former leader for 16 years.
"The victims leaving the court has smiles on their faces," said Al Jazeera's Colin Baker, reporting from Dakar.
Habre is the first former head of state to be convicted for human rights abuses in the court of another nation.
The court dropped the rape conviction against Habre because the charge was introduced during the trial, said head appeal judge Ougadeye Wafi.
However, the judge said he believed the accounts of a witness who said she was raped by Habre.
|Images of torture under the former Chad dictator's rule [Al Jazeera]|
"I have been fighting for this day since I walked out of prison more than 26 years ago. Today I am finally at peace. I hope that all the dictators in Africa take notice - no one is above the law!" said Souleymane Guengueng, who began collecting accounts of survivors not long after being freed in 1990 from prison, and founded the Association of Victims of Crimes of the Regime of Hissene Habre.
Clement Abaifouta, the president of the association and a former prisoner who was forced to bury dead inmates, said this was the beginning of something new.
"Today is a great and a famous day for all victims. I am dreaming of now building a new society without the violence, a new society with democracy and with respect for human beings," he said.
Over 90 witnesses testified in the trial.
The Extraordinary African Chambers was created by the African Union and Senegal to try Habre for crimes committed during his presidency from 1982 to 1990.
A 1992 Chadian Truth Commission accused Habre's government of systematic torture, saying 40,000 people died during his rule.
Habre was first indicted by a Senegalese judge in 2000, but legal twists and turns over a decade saw the case go to Belgium and then finally back to Senegal after unwavering pursuit by the survivors.
Future war crimes cases
While it took decades for Habre's case to come together, the methods used in trying the former president may be used in other trials going forward.
Some say that future war crime tribunals targeting Syrian officials could be next.
"There was no precedent in Senegal of taking up these kind of cases beforehand," Stephen Rapp, a lawyer with The Hague Institute for Global Justice, told Al Jazeera. "We have laws in Europe that allow cases to be brought if there is an impact of the crimes in Europe. And we have a massive impact of the crimes in Syria in Europe.
"Just have to look at the refugees, of the 11 million people displaced in Syria," Rapp said.
Habre's case contained powerful documentation, including files of his own political police, documents in his handwriting and testimonies from those who received his orders.
There is a similar trove of evidence relating to Syria available.
A special team set up by the UN to prepare prosecutions of war crimes committed in Syria was established earlier this year, though a commission of inquiry has been collecting evidence since 2011. That commission has amassed around 7,000 interviews and witness statements so far.
While Syria is not a member of the Rome Statute, and efforts to refer the conflict to the ICC have been vetoed by Russia and China in the past, justice may instead run by way of European courts.
"I think the lesson here is that with solid documentation, with the dedication of victims, with the support of international organisations and some supportive states, you can achieve justice even in places even where people think it's impossible," Rapp said.
Additional reporting by Jenna Belhumeur
Source: Al Jazeera and news agencies