The verdict will almost certainly remove from public life a man who is widely seen as the puppet master behind the government.
Dragnea was also a key figure in his party's push for controversial judicial reforms which have led to clashes with Brussels and have overshadowed Romania's first-ever EU presidency, Presstv Reported.
Dragnea was unsuccessful in his bid to overturn a conviction he received last year for using his influence to procure fake public jobs for two women who were actually working for the Social Democrats (PSD) at the time.
The High Court of Cassation and Justice on Monday confirmed his original three-and-a-half-year jail sentence.
Dragnea was not present in court to hear the verdict.
Despite the PSD's election victory in 2016, Dragnea's deep-seated ambition to become prime minister was thwarted because of a previous suspended jail sentence for electoral fraud.
The verdict also comes on the heels of a stinging defeat for the PSD in Sunday's European parliament elections.
'Storm of hatred'
A grim-faced Dragnea appeared in front of the cameras on Sunday night to say the PSD had faced a "storm of hatred" in the election results, with the party falling 12 points from its score in 2014 to 25.8 percent.
Center-right and liberal opponents, by contrast, racked up almost 50 percent between them.
Young people and city-dwellers turned out in force to express their frustration with the government, with turnout nudging 50 percent.
Florentin Negrutiu, editorial writer for the Digi24 site, said of Monday's court verdict, "This is a victory for the judicial system after two and a half years in which Dragnea has tried to employ all means to stop it working."
On the eve of Monday's court appearance, Dragnea was his normal defiant self, alluding to conspiracies against him and "unimaginable pressure" being exerted on judges to find him guilty.
He also surprised many by saying that he would not challenge incumbent President Klaus Iohannis in elections expected late this year.
Over the past three years, Dragnea and the PSD -- the successor party to the communists -- had courted voters in poorer and more rural areas of the country with generous promises.
Despite not becoming prime minister, the mustachioed leader wielded considerable influence behind the scenes and toppled two prime ministers in just seven months before nominating Viorica Dancila to the post in January 2018.
Analysts say his focus on curtailing the activities of the country's anti-corruption agency has lost the PSD many voters.
His argument was that he wants to put an end to abuses of power by prosecutors "suffered by millions of Romanians."
Dragnea had begun to mimic attacks on the EU of the kind made by Hungarian Prime Minister Viktor Orban, accusing Brussels of "interfering" in Romania's affairs and its sovereignty.
A second headache for the PSD is likely to come in the results from a referendum also held on Sunday on the government's controversial judicial reforms.
Turnout for the vote, called by Iohannis, was well in excess of the 30-percent threshold needed to make the referendum valid and analysts expect voters to have rejected the PSD's plans.
The European Commission on Monday called on the government to listen to the "clear message" from voters and ensure "an independent judicial system which offers no impunity for criminals and no tolerance for corruption".
The Commission has warned sanctions may follow if the government does not change course.