CBI court judge Shiv Pal Singh, who had convicted Prasad, along with 10 others on December 23, also imposed a fine of Rs 10 lakh on him for two cases in the scam.
The RJD went into a huddle immediately after the pronouncement of the sentence.
On Friday, Lalu Prasad sought a minimum punishment citing health issues. The court had acquitted six accused including former Bihar Chief Minister and JD (U) leader Jagannath Mishra.
Reacting to the verdict, the BJP and its ally JD (U) said no one was above the law while the RJD claimed its leader fell prey to a "conspiracy" by Bihar Chief Minister Nitish Kumar and the saffron party. The 16 convicted people include three former IAS officials Phoolchand Mandal, Beck Julius and Mahesh Prasad.
A total of six cases related to the scam, were being probed by the investigation authorities.
Lalu Prasad is at present cooling his heels in Birsa Munda Central Jail in Ranchi.
In 2013, Prasad was convicted in the first fodder scam case and was sentenced to five years imprisonment along with a fine of Rs25 lakh by another special CBI court. The 1997 fodder scam case had virtually brought down his political career.
The case pertains to an alleged withdrawal of Rs. 89.27 lakh from Deoghar district treasury between 1994 and 1996.