The ruling came in a 15-year legal battle that started in a sleepy Houston probate court and stretched all the way to the U.S Supreme Court.
It initially pitted Smith against the son of J. Howard Marshall over the $1.6 billion estate the oil tycoon left after his 1995 death at age 90. J. Howard Marshall had wed Smith the year before when she was 26.
Marshall's son E. Pierce Marshall died in 2006 and Smith perished after a drug overdose in 2008. Their heirs and lawyers kept up the legal fight that included one ruling awarding Smith $474 million.
Kent Richland, who represents the Smith estate, said he would appeal the latest ruling but hasn't decided whether to ask the appeals court for another hearing or take the case back the U.S. Supreme Court regarding different issues.
Eric Brunstad, a lawyer for Marshall family members, said they hoped the legal fight was over.
"Our only wish would be that Pierce were here to see his vindication," the family said in a prepared statement.
The three-judge appeals court panel ruled unanimously that a 2001 jury verdict in Houston in favor of the Marshall family should be honored over two federal court rulings in Smith's favor.
The appeals court said the federal bankruptcy court award of about $447 million and a subsequent federal trial court ruling that lowered the amount to $89 million should be ignored.
The appeals court said the Houston jury heard from all the parties, including Smith, during a five-month trial in which she accused E. Pierce Marshall of illegally coercing his father to keep Smith out of his will.