The Women of Algiers (Version O) painting was sold at a Christie’s auction on Monday for a record $179 million (£115m) – far exceeding its original estimate.
A large number of bidders competed for the piece, a vibrant, multi-hued painting featuring a semi-clothed woman amid several smaller nudes.
Once owned by the American collectors Victor and Sally Ganz, it was inspired by Picasso’s fascination with the 19th-century French artist Eugène Delacroix and is part of a 15-work series he created between 1954 and 1955.
The New York sale also saw another record set, with Alberto Giacometti’s life-size sculpture Pointing Man fetching $141.3 million, making it the most expensive sculpture ever sold at auction.
Overall, 34 of 35 lots sold at the auction for a total of $706 million.