The Istanbul court ordered the TFF to pay 23,000 Turkish Lira ($7,900) in material and moral compensation over its treatment of Halil Ibrahim Dincdag, the Dogan news agency reported.
However the sum was lower than the 110,000 Turkish Lira ($38,000) demanded by Dincdag's lawyers, in a case that had become a symbol of discrimination against gays and lesbians in largely conservative and overwhelmingly Muslim Turkish society.
The TFF had said that since he was exempt from military service due to his homosexuality, Dincdag fell into the army's classification of "unfit" and thus unable to do the job of refereeing.
Dincdag had been a referee in the Trabzon region on the Black Sea region but had his licence revoked in 2009 after publicly coming out as gay.
'Break the taboo' -
"This lawsuit was a case in favour of all people who suffered injustice and discrimination," Dincdag told the Diken online news website.
"Winning this case was really something very important. The court has now confirmed that my fight was a right."
"I hope that this decision sets a precedent for similar cases. This is a victory."
However Dincdag and his lawyer Firat Soyle said that they would appeal the verdict to be awarded the full amount of compensation demanded in the lawsuit.
"We are happy that justice has been done but we are going to appeal regarding the figure to be paid," the lawyer said, quoted by Turkish media. "Given the moral and material damages suffered, it is a small figure."
"December 29, 2015 is a victory in the fight against homophobia in football and also a victory for the LGBT movement in Turkey," he added. "We have to break the taboo on football over homophobia with this decision."
Turkish media said that Dincdag had been a football referee in Trabzon for 13 years when his license was revoked in 2009 and has been unable to officiate at any match since.
He also lost his job as radio presenter on a sports show on a local station.
The issue of homosexuality in football, by far the most popular sport in Turkey, remains a virtually untouched topic in the macho society.
The military's attitude to homosexuality has also been controversial, with gays needing to undergo nude examinations to prove they qualified for an exemption for military service due to their sexuality.
However Turkish media reports last month said that this requirement had now been dropped and only verbal declarations would now be taken into consideration.
Homosexuality has been legal in Turkey throughout the period of the modern republic and was also legalised in the Ottoman Empire from the mid-nineteenth century. But gays in Turkey regularly complain of harassment and abuse.
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