The victim was reportedly made to believe that she was in debt to the clairvoyant and could repay that debt only by becoming a sex worker.
Tokyo's District Court heard the woman was sometimes forced to live on the equivalent of $1 a day.
The fortune teller reportedly pocketed nearly 90m yen ($785,000; Â£639,000).
The victim started consulting with the clairvoyant in 2008, when she was troubled by issues such as a divorce, and became dependent on her advice, local media reported.
In 2011, she was forced to move into an apartment the fortune teller owned, and ordered to work as a prostitute to pay rent and other costs.
"The fortune teller fuelled the woman's fears by leading her to believe that she owed her a lot of money," judge Sotaro Tomuro said.
The woman handed over almost all of her income, the court heard.
A fortune teller in Japan has been ordered to pay $850,000 (Â£691,000) in damages to a female client she had forced into prostitution, reports say.