Muntadhar al-Zaidi now will serve one year in jail instead of three, the attorney said. Bush was able to duck, and was unhurt in the incident.
Iraq's Central Criminal Court sentenced al-Zaidi to three years in March after he was found guilty of assaulting a foreign head of state on an official visit to Iraq. It was Bush's last visit to Baghdad before leaving office in January.
Al-Zaidi's lawyer, Dhiaa al-Saadi, said the appeals court announced its decision to reduce the sentence Monday, after lawyers appealed the criminal court ruling.
Al-Baghdadia TV, where the 30-year-old al-Zaidi works, has been broadcasting a bulletin announcing the reduced sentence.
In many traditional Middle East circles, throwing shoes at someone is considered a grave insult.
Al-Zaidi became a kind of hero after his actions, because of Bush's unpopularity - mainly as a result of the Iraq War. Expressing their own freedom on Facebook, a worldwide fan base rose up. Supporters formed hundreds of fan pages and groups, including one called the "Shoe-Throwing Appreciation Society."