Advisor recommended reuse excerpt of master's dissertation in Ph.D. Thesis I am finishing writting my Ph.D. thesis and a bit short on time. Part of my Thesis would be a review of literature, regarding the method used. This method was used as well in my Master's work (under the same advisor) and thus, my Master dissertation contains a portion in which a literature review is performed. My advisor suggested that it would be good to reuse this from my dissertation.

Now, I went to look at my dissertation to select the excerpts, and I see that it amounts to around 16 pages in a 150 page dissertation. My thesis is currently with 103 pages and I believe that in the end it will have approximatelly the same length as my dissertation.

Of course, when I saw the numbers, a red light of self-plagiarism lighted up. Of course, there would be some addaptations. For instance, there are occasions in my dissertation where I refer to a previous chapter, which would need to be adapted. And of course, I would clearly state which parts are repeated.

However, it is a large excerpt, which makes me really scared about this and I seek a second opinion on the matter.
I would treat a long excerpt of your own material acceptable provided that you also cite it, listing carefully that it is an excerpt and pointing to the original source. I'm assuming that you hold copyright on the early work, not having yielded it to another publisher. 

Don't confuse the two issues, permission to create a derived work, and proper citation. The permission is obvious if you hold copyright and by citation you avoid any claim of self plagiarism. 

Note that the main purpose of avoiding self plagiarism is to let readers find the original source of material and, thus, learn its complete context. By citing, you make this possible.