In 1979, she divorced Majors and took up with Ryan O'Neal, who was still a major movie star. In 1983, she fired her manager, changed her hairstyle, and set out to prove herself as a dramatic actress. Her twin triumphs from this era were an off-Broadway play, Extremities, wherein Fawcett's character got the best of a would-be rapist, and the TV movie The Burning Bed, based on the true story of a woman long abused by her husband, who doused him with gasoline and lit him afire as he slept. In 1991 Fawcett and O'Neal starred in a short-lived sitcom, Good Sports, playing cable sportscasters who had once been lovers. In a 1993 appearance on The Late Show with David Letterman, Fawcett was incoherent and glass-eyed, leading many observers to speculate that she was high on drugs. Fawcett, though, insisted then and now that she has never used illegal drugs, and says Letterman simply made her nervous. In 1997 she ended her relationship with O'Neal, and starred in a Playboy video, using her naked body as a paintbrush to create alleged art.

In 1998 she was beaten by her then-boyfriend, moviemaker James Orr, after she took several swings at his car with a baseball bat. Fawcett reportedly asked police to drop charges against him, but Orr was prosecuted and convicted anyway. According to the police report, he had grabbed Fawcett by the throat, slammed her head into the pavement, and kicked her "several times to her upper body as she laid on the ground." Other than beating Fawcett, Orr is best known for co-writing Three Men and A Baby and Sister Act 2, and he directed Fawcett's 1995 flop Man of the House co-starring Chevy Chase.

In 2000 she earned good reviews playing Richard Gere's mentally deranged wife in Dr. T & the Women. She almost made her Broadway debut in 2003 starring in Bobbi Boland, a play about a mid-life crisis for an aging woman who won a beauty contest decades earlier. After disastrous audience response during preview performances, though, the play never even opened. In 2005 she starred in a reality series, Chasing Farrah, where she came across as a nice Texas girl, and treated obsessing fans with more respect than they probably deserve. Fawcett and O'Neal rekindled their romance in 2001, after he was diagnosed with leukemia and she appeared at his doorstep, offering to help in any way she could. They visited their heroin-addicted son Redmond in rehab together, and Fawcett and O'Neal have been living together again since she was diagnosed with intestinal cancer in 2006. In February 2007, her doctor told Fawcett she had shown "a full and complete response to treatment", and was cancer-free. Three months later she was diagnosed with a malignant rectal polyp.

• The Cookout (2004) .... Mrs. Crowley
• Hollywood Wives: The New Generation (2003) (TV) .... Lissa Roman
  ... aka Femmes à Hollywood (Canada: French title)
  ... aka Jackie Collins' Hollywood Wives: The New Generation (USA: complete title)
• "The Guardian" .... Mary Gressler (4 episodes, 2002-2003)
       - Understand Your Man (2003) TV episode .... Mary Gressler
       - No Good Deed (2002) TV episode .... Mary Gressler
       - The Dead (2002) TV episode .... Mary Gressler
       - Testimony (2002) TV episode .... Mary Gressler
• "Spin City" .... Judge Claire Simmons (4 episodes, 2001)
       - Chinatown (2001) TV episode .... Judge Claire Simmons
       - She's Gotta Habit (2001) TV episode .... Judge Claire Simmons
       - The Apartment (2001) TV episode .... Judge Claire Simmons
       - The Arrival (2001) TV episode .... Judge Claire Simmons
• Jewel (2001) (TV) .... Jewel Hilburn