Exposto contends that she was duped into transporting the drugs by her online boyfriend, who she had flown to Shanghai expecting to meet.
Exposto said she thought the bag contained clothing - not drugs - and that she'd even willingly put it through an airport scanner on her layover in Kuala Lumpur.
But prosecutors challenged the decision and an appeal court overturned the acquittal on Thursday, and found her guilty, her lawyer Muhammad Shafee Abdullah said.
She had claimed she was the victim of a set-up after she was found with the drugs in her bag after arriving on a flight from China in 2014.
After engaging in a long online romance, Exposto had travelled to Shanghai to see "Smith".
According to her lawyer, she had fallen for an online romance scam and had been tricked into carrying the drugs.
Believing him to be a United States soldier based in Afghanistan, Exposto said the charming military man had "made [her] feel loved, he made [her] feel wanted", and would send photos of himself to the grandmother. "You have another round of appeal and we wish you luck", Baki said.
Sydney grandmother Maria Elvira Pinto Exposto has reportedly been sentenced to death by hanging.
"And that's the tragedy - this is a very innocent person, in my opinion, who's had to suffer an bad lot for being a victim of a crime", she said.
On December 27 past year Exposto was acquitted of drug trafficking but faced a prosecution appeal against the acquittal on charges of trafficking 1.5kg of methamphetamine into Malaysia.
"She said to our legal team 'Don't worry, you all fought very hard for me.'"
Anyone caught with at least 50 grams (1.75 ounces) of crystal meth is considered a trafficker in Muslim-majority Malaysia, and death by hanging is mandatory in the case of a conviction. The country carried out four executions in 2017, down from nine the year before.
"Australia opposes the death penalty in all circumstances for all people", Foreign Minister Julie Bishop said in a statement to CNN.