He was convicted for possessing about 2,800 kilos of ammonium nitrate, which is commonly used in agriculture but when mixed with other substances can make a bomb. Its possession requires a permit in Thailand.
"The court found him guilty of illegal armament possession and sentenced him to four years in jail, but due to his useful testimony during the investigation and hearing his sentence is reduced by one-third to two years and eight months," a judge said.
The court said investigators could not prove Hussein had links with Hezbollah, a Lebanese Shiite Muslim group that is blacklisted as a terrorist organization by Washington.
Hussein, who had faced a maximum of five years in jail, denied the charges and the alleged links to Hezbollah.
Before his arrest, the United States had warned of a "serious" threat of a terrorist attack on tourist areas in Bangkok.
A smiling Hussein hugged his wife and daughter after the ruling.
Asked how he felt, he replied: "I'm happy."
His lawyer Wittaya Buranasin said the defence would appeal.
"The investigation process should follow the law. Hussein himself said clearly he did not have a lawyer present when he was questioned," Wittaya said.
In a separate case, two Iranian men were last month sentenced to between 15 years and life for their parts in a botched bomb plot last year in Bangkok that ended with one of them having his legs blown off.
The pair were among five Iranians suspected of involvement in blasts that Israel linked to a 2012 spate of attacks on its diplomats around the world.