The 25-year-old was accused of killing a 22-year-old woman in a brutal attack in Askersund, central Sweden, in June last year. The victim was repeatedly stabbed before her body was then chopped up with a saw and knife.
In court the woman denied the murder charge but did admit to aggravated assault, manslaughter and grave desecration charges.
She was sentenced to 16 years in prison by Örebro district court in December. But the Göta Court of Appeal on Wednesday upped her punishment to lifetime imprisonment.
The verdict said that the murder was "completely unprovoked and [carried out] in an especially brutal way" and that "the chain of events was extended and meant much suffering and death anxiety".
Prosecutor Lars Duberg told The Local on Wednesday that he had not yet read the sentence, but welcomed the decision.
"I do not feel pleased, but it was the right decision," he said.
But the woman's lawyer, Johan Eriksson, told Swedish news agency TT that they would appeal the case to the Supreme Court.
"She is very determined about the fact that it was not her intention to kill," he said.
During the whole court process, the woman has said she had only intended to frighten the 22-year-old. She said she had gone to the victim's apartment to confront her as they were two parts of a love triangle involving a man they were both seeing.
The district court heard that the murder was committed in an apartment after the woman showed up with a range of weapons including a set of hammers, a carving knife as well as sleep hormones, syringes and needles.
After killing the victim, the woman then dismembered the body in the bathroom with a saw and knife. Afterwards she then stuffed the remains into Ikea bags and dumped them in a forest.
The prosecutor had demanded that she spend life in jail for murder, arguing that the killing was premeditated. He welcomed the appeals court verdict on Wednesday.
"The case is unique. A female culprit, a jealousy drama, a planned murder and the murder being carried out by a woman. That's not very common," Duberg told Swedish tabloid Aftonbladet.
Few women have faced life sentences in Sweden. On average there is just one dismembering type murder in Sweden a year and the culprit is usually a man who has killed another man or a woman.