Mohammad Khordadian, Iran's best-known male dancer, was also ordered to remain in Iran for 10 years and barred from attending public celebrations or weddings of people who are not his relatives for three years, lawyer Abdolrahman Rasouli said.
"Khordadian is innocent. He has done nothing wrong to deserve punishment," Rasouli told The Associated Press.
Khordadian, a 46-year-old pop and folk dancer, could not be reached for comment. During his trial, he told the court he never intended to corrupt anyone.
The dancer was jailed in May as he was making his first visit to Iran in 20 years.
He was released from Tehran's Evin prison on Sunday. The 10-year suspended jail term will be implemented if he is convicted again on the same charge.
Rasouli said the dancer will appeal the verdict.
"Khordadian's release from jail is an important step forward. He loves to live in Iran but it would have been great if he had been allowed to sell his house in the States first," he said.
The lawyer quoted Khordadian as testifying: "Dancing is my job and I had no intention of promoting corruption among the youth."
Khordadian was a taxi driver in Tehran before he left in 1980. His graceful body movements and aptitude for dance encouraged him to pursue dance as a career.
He is best known for a belly dance called "Arabic Dance." In it, Khordadian wears traditional clothes and takes the stage with one group of women dancers on his right and another group on his left.
Men and women dancing together in public is not permitted under Iran's strict interpretation of Islamic behavior.
Khordadian's dance programs are widely watched by Iranian expatriates and many inside Iran on Los Angeles-based, Persian-language satellite television channels.
A website promoting his classes in the U.S. is now dedicated to helping him overturn the ruling.
Rasouli said the court's ban on Khordadian's leaving Iran was intended to "keep him away from an atmosphere that may provoke him to repeat his offenses."
Khordadian was traveling on an American passport and obtained his visa in Dubai, United Arab Emirates, before traveling to Iran to visit his ailing father and relatives, Rasouli said.
The court verdict against Khordadian coincides with a new crackdown on what Iranian officials call "acts of social immorality." Young Iranians driving around with loud music blaring out of their car radios have been charged under the social immorality rules.
The reformists have protested that "acts of social immorality" have not been clearly defined.
"Social virtues and discipline will never be established by the use of police force," the pro-reform newspaper Aftab-e-Yazd said last week.
"Citizens complain of arbitrary police action. Many citizens say they have been arrested and body-searched without doing anything wrong and others complain of insulting police behavior," the daily said.
Sweeping social restrictions imposed after the 1979 Islamic revolution have gradually been eased since the election of reformist President Mohammad Khatami in May 1997. But women must still wear headscarves and the mingling of unrelated men and women is frowned upon.
Meanwhile, the hard-line judiciary banned Hashem Aghajari, a leading reformist scholar, from leaving the country, the official Islamic Republic News Agency reported Monday. The report came two days after Aghajari failed to appear in court on charges of insulting Islamic sanctities in a speech he gave last month.
IRNA did not give a reason for the ban or say when it was issued. In an unrelated case, an appeals court has upheld an 11-year jail term sentence against veteran journalist Siamak Pourzand, the government-owned daily Iran reported Sunday. The paper gave no further details.
Pourzand, 73, is a freelance writer who was convicted in a closed-door trial earlier this year of "taking action against national security."
After losing control of parliament in February 2000 legislative elections, hard-line followers of Iran's supreme leader, Ayatollah Ali Khamenei, have tried to protect their eroding power by thwarting Khatami's growing reform movement.
Hard-liners, through their control over unelected institutions such as the judiciary and police, have closed down pro-democracy publications and jailed or harassed scores of prominent reformist journalists and activists.
By Ali Akbar Dareini