Fathy was charged with “spreading fake news” in May after posting a video in which she recounted her experiences.
She was handed a two-year jail term by a lower court in September, but it was suspended pending an appeal.
The appeal ruling came days after she was freed on bail over a separate case.
Her husband Mohamed Lotfy, head of the independent Egyptian Commission for Rights and Freedoms, said she could be taken back into detention at “any time”.
Fathy, a 34-year-old mother-of-one, is a former activist in the April 6 youth movement that was at the forefront of the 2011 uprising against former President Hosni Mubarak.
She was arrested in Cairo two days after posting a 12-minute video on Facebook in which she described how she had been sexually harassed twice in one day and condemned the government’s failure to protect women.
She also criticised deteriorating human rights, socio-economic conditions and public services.
Fathy was convicted four months later of “spreading fake news that harms national security”. A judge sentenced her to two years in prison that could be suspended until appeal pending payment of $1,120 (£885) in bail and a $560 fine.
Despite paying the bail and fine she was kept in custody because she faced trial on separate charges, including “belonging to a terrorist group”. Mr Lotfy said they were not aware what the charges related to.
Last Thursday, Fathy was released on probation after a judge in the capital accepted her appeal against her pre-trial detention in relation to the terrorism case.
But on Sunday an appeals court upheld her two-year sentence for spreading fake news – a decision Amnesty International called an “outrageous injustice”.
“The fact that a survivor of sexual harassment is being punished with a two-year prison sentence simply for speaking out about her experience is utterly disgraceful,” said Najia Bounaim, the human rights group’s North Africa campaigns director.