FIFA ruled on Friday that O'Leary was unfairly dismissed from the manager's job in 2011 and that he was due the full sum owed under his contract.
O'Leary's claim was upheld by FIFA's Players Status Committee after he was dismissed one year into a three-year deal in 2010.
After dismissing him, Al Ahli claimed that he had abandoned his job, despite the fact that their own officials had told the media at the time that O'Leary had been dismissed.
Al Ahli said FIFA lacked jurisdiction to hear the claim, but their arguments were rejected by the governing body which said O'Leary was due his full salary.
In a statement issued through the League Managers Association, O'Leary said: "It has taken a long time to deal with this matter but I am pleased that all issues have now been finalised.
"I hope my case provides reassurance to all managers and coaches working all over the world that there is a formal system in place that provides employment protection."
Richard Bevan, chief executive of the LMA, added: "We are clearly delighted with the outcome.
"The added significance and wider impact of this process is the proof that FIFA has mechanisms in place which regulate worldwide employment issues.
"It is extremely encouraging to know that the world governing body can provide a means of redress for managers and coaches at all levels seeking to establish their employment rights, wherever in the world they happen to work."
- Sports & Recreation