Nashville Chancellor Ellen Hobbs Lyle placed a permanent ban on Fisk selling the 101-piece collection and set a deadline for when the historically black university must retrieve the artwork from storage and put it on display.
Lyle had rejected several previous attempts by the cash-strapped school to sell artworks, including O'Keeffe's signature 1927 oil painting "Radiator Building - Night, New York", worth as much as $20 Million.
CBS News correspondent Randall Pinkston reported last month that Fisk is in financial distress and must show economic viability when its accreditation is reviewed this summer; otherwise, the school may be forced to close.
"I think we could survive if we had a long time to build our endowment and build our resources but we don't have a lot of time," Fisk University president Hazel O'Leary told Pinkston. "We need the money coming from the sale of 50 percent of the Stiglietz Collection, in order to ensure our stability for the next two or three years."
The Georgia O'Keeffe Museum in New Mexico had sued to gain the rights over the collection because of the schools' attempts to sell paintings and because they weren't on display. The Santa Fe museum is the legal representative of the artist's estate.
"The museum is not interested in if Fisk survives or doesn't survive," said Jeff Selingo, the editor of the Chronicle of Higher Education. "Their interest really lies in protecting the integrity of this art collection."
Despite Fisk's financial woes the school's academic reputation remains high - a tradition President O'Leary hopes will continue.
"Our graduates, our students and our spirit as a university is our legacy," she told Pinkston.
But now that the courts have ruled that selling one of the school's most valuable assets is not an option, the future of that legacy hangs in the balance.