Michael Gillespie failed to give way to an oncoming car and overtook parked vehicles when it was unsafe before grandmother Elizabeth Colville (82) was thrown forward and struck her head following the sudden braking.
A judge pointed out that at the time of the fatal incident in Freuchie he was driving at 26 mph, in excess of the 20 mph limit.
Lord Richardson said: "I do acknowledge at the time you immediately contacted the emergency services in order to assist the passenger who had been injured."
The judge said Gillespie (35) who was assessed as posing a very low risk of further offending, had acknowledged it was his responsibility as a driver to ensure passengers were safe.
Lord Richardson said at the High Court in Edinburgh: "I also accept you are sincerely and genuinely remorseful."
"In your case, in all the circumstances, I am satisfied that there is an alternative to imprisonment," he told Gillespie.
Gillespie, of Rymalton, Kirkcaldy, was ordered to carry out 234 hours of unpaid work within three years under a community payback order. He was also disqualified from driving for three years.
He originally faced a charge of causing death by dangerous driving, but the Crown accepted his guilty plea to the lesser offence of causing death by driving carelessly in Freuchie on April 8 in 2019.
The victim was so seriously injured in the incident that she died three days later at Victoria Hospital, in Kirkcaldy. She suffered brain and spine injuries.
A motorist told the court that she was driving in the opposite direction to the bus, with parked cars on the other side of the road.
Jane Gourlay said: "I thought that the driver would move over before he got to the parked cars but he seemed to pick up speed and came towards me." She said it stopped in front of her car.
One of the 14 passengers on the bus said that the grandmother "flew through the air" after the sudden braking to the bus.
Defence counsel Callum Hiller had urged that Gillespie should be dealt with by a non-custodial disposal. He said the former bus driver was a first offender with no outstanding matters.
He said: "This was a lapse in judgement on the part of Mr Gillespie which had catastrophic consequences."