Steven Kerr, 31, pled guilty to wilful fire-raising after the blaze at Tullis Russell in Glenrothes on December 27, 2011. He was ordered to spend 42 months in prison when he appeared at Kirkcaldy Sheriff Court.
Around 40 firefighters fought the flames after the fire erupted in the paper mill at around 3.40am.
Detective Sergeant Stewart Andrew, of Police Scotland, said: "Not only did this fire result in significant damage to a main employer in the Glenrothes area, it put both lives and livelihoods at serious risk.
"Kerr has proven himself to be a malicious and reckless individual who showed little regard for the repercussions of his actions and has even still failed to provide a motive for starting the blaze."