He will now spend Christmas in prison after he admitted making bogus claims amounting to nearly £13,000.
Glasgow-born MacShane quipped "Cheers" as he was given his six-month sentence, adding "Quelle surprise" as he was led from the dock.
Earlier the judge, Mr Justice Sweeney, told him he had shown a flagrant breach of trust and had "no-one to blame but yourself".
He added: "The dishonesty involved was considerable and repeated many times over a long period. The deception used was calculated and designed to avoid suspicion falling on your claims."
The former MP had pleaded guilty to filing 19 fake receipts for "research and translation" services between January 2005 and January 2008.
The court heard MacShane incurred genuine expenses but chose to recoup them by dishonest false accounting rather than through legitimate claims.
The money was used to fund a series of trips to Europe, including one to judge a literary competition in Paris.
Mr Sweeney said: "However chaotic your paperwork was, there was deliberate, oft repeated and prolonged dishonesty over a period of years, involving a flagrant breach of trust and consequent damage to Parliament, with correspondingly reduced confidence in our priceless democratic system and the process by which it is implemented and we are governed."
The judge said he considered mitigating features, including the fact the offences were "not committed out of greed or for personal profit". He also said MacShane carried out the offences at a time of turmoil in his personal life.
The court heard the ex-Europe minister and his wife divorced in 2003, his daughter Clare was killed in an accident in March 2004, his mother died in 2006 and his former partner, newsreader Carol Barnes - Clare's mother - died in 2008.
His new partner is Vicky Pryce. She was jailed this year for putting speeding points earned by her then husband, ex-cabinet minister Chris Huhne, on her licence.
Other MPs to be jailed since stories of expenses fiddling first engulfed Westminster in 2009 include former Labour MP for Livingston Jim Devine, as well as his party colleagues Elliot Morley, David Chaytor and Eric Illsley.
Two Conservative peers have also been jailed - Lord Hanningfield and Lord Taylor of Warwick.
Another former Labour MP, Margaret Moran, was spared prison and given a supervision order after suffering from mental health problems.
A number of Labour MPs have said Mr MacShane had been treated harshly.
They pointed to the fact he had made no personal gain and had also pleaded guilty to the offences.
Glasgow MP Tom Harris said: "I think it is very disappointing that the judge decided to treat him as MPs who had gained personally from their fraudulent activities."
Jonathan Isaby, political director of the TaxPayers' Alliance campaign group, said justice had "finally been done".
However, he added: "It is staggering it has taken four and a half years for this case to be brought to a conclusion and serious questions need to be asked of the various authorities involved as to why it took so long."
MacShane, who served as Europe minister under Tony Blair, resigned as MP for Rotherham in South Yorkshire last November.