The Hollywood star has been left with an award of $600, ooo for general damages only after her claim for special damages was rejected by three judges of the appeals court.
In September a year ago, Wilson won the largest defamation payout in Australian legal history, with Bauer ordered to pay $4.56 million in damages after accusing Wilson of being a serial liar in one of their magazines.
She was awarded more than $4.5m in damages by Justice John Dixon plus interest and court costs, in her libel case against the magazine publisher.
"For a considerable number of reasons, the critical inferences drawn by the judge could not be upheld", the summary of judgment said.
Today's ruling at the Court of Appeals slashed the general damages payout to $600,000, and totally sets aside the special damages payout, ruling that Wilson had not properly established that she had suffered significant economic damages via losing film roles as a result of Bauer's coverage of her.
During a two-day appeal hearing in Melbourne in April, Bauer's barrister Michael Wheelahan QC argued the level of damages was "manifestly excessive".
Wilson alleged she was defamed in several articles published in 2015, including a Woman's Day story titled 'Just who is the REAL Rebel?'
Wilson, 38, was not present when the court handed down its ruling and published a 252-page judgement.
Wilson still maintains outward assertions that she will donate whatever payout she receives to charities, as well as reinvesting in the Australian film industry.
She took to social media on Wednesday night to say regardless of the outcome she had "already won the case".
"The Court of Appeal in Australia will be handing down their decision in the morning re my defamation case against @bauermedia".