Due in part to legal rules about the maximum size of damages awards, judge Winifred Smith on Thursday reduced by more than 95 percent the original total awarded to Alva and Alberta Pilliod, to just under $87 million.
But she denied Monsanto's request to overturn the jury's finding in favour of the Pilliods and found "there was clear and convincing evidence that Monsanto's actions were reprehensible," justifying punitive damages.
In a statement Friday morning, Bayer said it would appeal.
The Pilliods had argued their use of weedkiller Roundup since 1982 caused their non-Hodgkin's lymphoma -- a type of blood cancer.
"The court finds that there was substantial evidence to support the jury's findings" that Roundup caused the Pilliods' cancers and that the manufacturer should have warned users about the risks, judge Smith wrote.
Roundup, whose active ingredient is glyphosate, is a flagship product of seeds and pesticides maker Monsanto, which Bayer acquired last year in a $63 billion deal.
The case is the third of more than 13,000 looming over Monsanto and Bayer in the United States over glyphosate, a legal risk that has weighed on the company's stock price.
Just before midday in Frankfurt on Friday, the shares were trading up 1.3 percent at 59.94 euros ($66.80), topping the blue-chip DAX index.
The fact the court stuck by the finding that Roundup caused the Pilliods' cancers meant Thursday's reduced damages award was only a "step in the right direction", Bayer said in a statement.
"Bayer expects to appeal on multiple grounds," the Leverkusen-based group added.
The firm pointed to "the extensive body of reliable science and conclusions of leading health regulators worldwide that confirms glyphosate-based herbicides can be used safely and that glyphosate is not carcinogenic."
Judge Smith found that "there is evidence that Monsanto had information that was not available to the scientific or medical community and that it sought to impede, discourage or distort scientific inquiry and the resulting science."
"Monsanto conducted initial studies about glyphosate but decided not to look further when there were indications that glyphosate might cause cancers," she added.
Previously, two other massive damages payouts awarded by US juries have been slashed.
A payout to pensioner Edwin Hardeman was cut from $80 million to $25 million, while former groundskeeper Dewayne Johnson is set to receive $78 million instead of $289 million.