The university had taken O'Neal to court, claiming that the portrait belonged to them as Fawcett had bequeathed all of her artwork, including a Warhol print, to her alma mater.
They claimed that the Warhol piece of Fawcett hanging in O'Neal's bedroom too belonged to the school, reported E! News.
O'Neal, however, countered saying that Warhol made two for her in 1980 and Fawcett, who died in 2009, had given one to him.
The jury ruled 9-3 in favor of O'Neal after a three-week trial that included testimony from Fawcett and O'Neal's son, Redmond, who supported his dad.
The 40-by-40-inch portrait is "her presence, in my life, in her son's life. We lost her. It seemed a crime to lose it, too," the 'Love Story' star said on the stand.
The value of the portrait is somewhere between USD 800,000 and USD 12 million.
Fawcett died on June 25 at the age of 62.
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