The Fife Constabulary officer took more than £600 that had been confiscated from an arrested man.
The theft, at Kirkcaldy police station, only came to light when officers tried to return the money to its rightful owner.
The outraged victim then hit back at the force by displaying a poster in the window of his home revealing a police officer had stolen from him.
He then complained to the Police Complaints Commission for Scotland (PCCS), claiming that officers visited him on numerous occasions to try to force him to remove the poster.
The man was eventually compensated out of police funds, and received an apology from a superintendent.
The chain of events is revealed in a report by the PCCS, which investigated several complaints by the unnamed man against Fife Constabulary.
The report said the man’s home was raided on April 9, 2009 and £605 seized.Later the following month, prosecutors ordered that the money be returned to the man, who was convicted of an offence.
The report continued: “On 26 May 2009 the property custodian at the police office discovered that the money was missing from the safe.
“It was later established that the money had been stolen by a police officer who was not involved in the case against the applicant.
“The officer was subsequently convicted of theft and is no longer in the police service.”
The victim of the theft then stuck a poster in his window which read: “A CID Officer stole a large amount of money from me. He got the sack and I got the dole.”
According to the report, the man claimed police visited his house 11 times, telling him to take the poster down.
The man said in his complaint to the PCCS: “I haven’t broken any laws with my protest so why are you lot breaching my human rights, I have freedom of speech.”
The PCCS report rejected three of the four complaints but upheld the man’s complaint about a delay in returning the money.
John McNeill, the commissioner of the PCCS, said: “The manner in which this complaint was dealt with by Fife Constabulary was not reasonable.”
A Fife Constabulary spokesman said: “The Force respects the findings of the PCC report. An officer resigned from the Force and was later convicted of theft.”