The school initially took legal action against O'Neal earlier this year, after an Andy Warhol portrait of Fawcett was shown in the actor's home during an episode of Ryan and Tatum: The O'Neals.
Lawyers for The University of Texas said that the portrait rightfully belongs to the school because Fawcett agreed to donate all her artwork to her alma mater after her death.
O'Neal has maintained that Warhol created two copies of the painting, one of which was given to Fawcett and the other was given to him.
The lawsuit was originally dismissed when judges ruled that federal courts had no jurisdiction over the case.
The University of Texas has now filed suit again in Los Angeles Superior Court in an attempt to force O'Neal to turn over the painting, according to documents obtained by NBC New York.
Lawyers for the school wrote in their filings: "Mr O'Neal has wrongfully converted the missing Warhol portrait that belongs to UT Austin. Mr O'Neal was not included in Ms Fawcett's will, nor in the Fawcett Living Trust, and Ms Fawcett's express wishes as stated in the Farrah Fawcett Living Trust have been thwarted by such conversion."
Warhol's Fawcett portrait is reportedly worth $30m (£18.3m).
Last week, Fawcett and O'Neal's son Redmond was sentenced to one year in rehab after pleading no contest to drug and weapons charges.
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