The Court of Arbitration for Sport has reduced Fernando Santos' eight-match suspension to four games, with two suspended.
The Portugal coach was reprimanded for an offence during the FIFA World Cup in Brazil last year when he was in charge of Greece's national team.
FIFA ruled that Santos was guilty of unsporting conduct towards a match official after Greece were defeated by Costa Rica in the round of 16.
Santos left his post after the World Cup and was later appointed by Portugal in September to replace Paulo Bento.
An initial appeal against the ruling was rejected by FIFA, leading Santos to take his case to CAS, which granted a stay of execution throughout the appeal.
CAS has now released a statement confirming it has partially upheld FIFA's punishment, but agreed that the sanction was excessive.
Subsequently, Santos will now serve a four-match ban, with two suspended during a six-month probationary period, while his original 20,000 Swiss franc fine has been halved.