Noriega, 62, won the reduction Thursday from U.S. District Judge William Hoeveler after arguing that he deserves credit for helping the United States pursue its interests in Latin America while he was in power.
Noriega must be released around 2007, and he could have a chance of getting out of prison as early as next year, his attorney said.
"We think the judge appreciated the general's contribution to the United States over the many, many years he was head of the Panamanian government," said defense lawyer Frank Rubino.
Noriega was captured after the United States invaded Panama in 1989. He was sent to prison for money laundering and drug trafficking. He has spent nearly nine years by himself in a two-cell suite at a federal prison near Miami since Hoeveler granted him special status as a prisoner of war.
Rubino said the ruling means Noriega will have a better chance to win release at his first parole hearing in 2000. The parole board had said that under the original sentence, Noriega wouldn't be approved for parole until at least 2019, when he would be more than 80.
"We are talking about getting out of jail at a time where he can still enjoy life," Rubino said.
Hoeveler said he shortened Noriega's sentence after considering the nature of his confinement and the "disparity between the defendant's sentence and the sentences served by his co-conspirators," some of whom are out of prison.
Parole has been abolished in the federal system, but Noriega was still eligible because he was sentenced prior to its elimination. All federal prisoners can earn time off for good behavior or other considerations.
Raised by adoptive parents in a Panama City slum, Noriega joined the army in 1962. He rose to power under Omar Torrijos, who seized power in a 1968 coup. Torrijos was killed in a plane crash in 1981
Noriega took control of the Panamanian government two years later. U.S. officials often praised him for his role in fighting drug traffic and paid him hundreds of thousands of dollars.
Relations began to sour in the late 1980s, amid reports of Noriega's involvement in drug trafficking and corruption and his increasingly independent political stand.
In December, Noriega had asked the judge to reduce his sentence to no more than 15 years for his help to the United States. Former U.S. officials testified that his assistance was crucial to U.S. foreign policy objectives in South America in the 1980s.
Donald Winters, chief of CIA operations in Panama, said Noriega brokered deals with South American leaders, acted as a liaison to Cuba's Fidel Castro, provided details on guerrilla and terrorist activities and even gave the former shah of Iran a safe haven.