The extra term of two years and eight months was imposed after a retrial at Taiwan's high court, in which Chen was acquitted of another corruption charge.
He was first jailed in 2009.
Chen has accused Taiwan's current government of persecuting him to win favours with China; he strongly supported independence while in power.
At his earlier trial, Chen was sentenced to life imprisonment, a sentence which was reduced on appeal last year.
In this latest case, Chen was initially found guilty of embezzling some $5m (Â£3m) from a special presidential fund while he was in power.
But the Supreme Court ordered a retrial last November, citing insufficient evidence.
Now Taiwan's High Court has acquitted Chen of the charge.
The court, however, found him guilty of money laundering and forging documents, and handed down the additional two-year sentence. That brings his overall sentence to about 20 years.
Chen's wife, former first lady Wu Shu-chen, received a longer sentence of nearly 12 years at the retrial, but she is unlikely to spend any time in prison because of her poor health, says the BBC's Cindy Sui in Taipei.
Analysts say the ruling could appease Chen's supporters and help President Ma Ying-jeou, who is seeking re-election in the upcoming January presidential race.
But it could also help the opposition party which Chen once led, by giving it more leverage to accuse the governing party of playing politics in prosecutions, says our correspondent.
Chen angered Beijing during his eight years in office by pushing for Taiwan's independence.
Taiwan has been ruled separately from China since the end of the Chinese civil war in 1949, when the defeated Kuomintang retreated to Taiwan to create a self-governing entity.
But Beijing sees Taiwan as part of its territory and has threatened to use force if the island ever moved to declare formal independence.
Taiwan's ex-President Chen Shui-bian - who is already in jail for corruption - has been given an additional sentence for money-laundering and forgery.