Twenty-seven-year-old Farkhunda was stoned to death and her body set on fire in broad daylight on the banks of Kabul river in March.
Forty-nine people, including 19 police officers, were arrested in connection with the killing.
In May a court sentenced four men to death and eight others were handed 16-year jail terms.
The appeal court overturned the original ruling and reduced the death sentences to 20 years in jail for three men and 10 years for the fourth.
The local media reported that the appeal was heard behind closed doors.
The court's decision was "remarkably disappointing", according to Kimberley Motley, a Kabul-based lawyer who represented the victim's family in the earlier trial.
Farkhunda's family was very upset about the sentence being overturned, she told RFI “There hasn’t been any valid explanation that justified the overturning of the sentence, which was pronounced in a closed and private hearing.".
She added that Wednesday’s decision sentence raises questions on whether the Afghan judiciary is taking the rule of law seriously.
“The current situation in which the sentences were overturned is remarkably disappointing," she went on. "I am hopeful that it will be appealed in the Supreme Court and that the trial will be open to the public.”
Kabul-based human rights activist Samira Hamidi told RFI that Wednesday’s decision shows no one in the government is serious in addressing the challenges faced by women in Afghanistan.
“We were hoping that taking Farkhunda’s case the justice system would prove the perception about it being corrupt, political and unfriendly to women in Afghanistan wrong,” she said. "People were expecting the appeal court to do better. Unfortunately, it didn’t happen, which is very disappointing."
However, she added that this decision was not acceptable to many people in Afghanistan and that they would be protesting next week against this ruling.
Some civil society activists had opposed the death sentence on principle but criticised the court for sitting behind closed doors.