The Hollywood star has been left with an award of $600, ooo for general damages only after her claim for special damages was rejected by three judges of the appeals court.
The suit was over a number articles, published in 2015, which made Wilson out to be a serial liar. Wilson was not present in court for the ruling, the Herald reported.
A year ago, a jury found that Bauer Media, which publishes magazines like Australian Women's Weekly and Woman's Day, had defamed Wilson when it published a series of articles claiming she'd lied about her name, age, and other details about her life.
On Thursday, Victorian state appeals court cut Wilson's payout to just A$600,000.
Bauer successfully challenged the finding that Wilson should be compensated for film roles, including Trolls and Kung Fu Panda 3, which she testified she had lost following the articles' publication.
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She was awarded more than $4.5m in damages by Justice John Dixon plus interest and court costs, in her libel case against the magazine publisher.
Wilson is now in Europe in pre-production on Taika Waititi's war-drama Jojo Rabbit but she tweeted that the case was "never about the money" and that proceeds would be going to charity.
Speaking on behalf of Bauer Media, general counsel, Adrian Goss, said: "It was important for us to revisit the award of damages".
It had been the largest defamation payout in Australian legal history, according to the Herald.
Wilson planned to donate her damages award to charity.
"While this case was never about the money for me ... In the lead up to today, major media organisations united in an unprecedented way to support Bauer's appeal in relation to that issue".