The 1937 "Femme au Beret et a la Robe Quadrillee (Marie-Therese Walter)" was estimated to fetch 36 million pound (41 million euros, $50 million) at the sale of impressionist, surrealist and modern art at prestigious London auction house Sotheby's.
It was the first time the portrait had emerged on the international art market and headlined the auctioneer's first major sale of the year, Sotheby's said.
The identity of the seller, and its new owner, were not released.
"It's an incredibly important museum quality picture," James Mackie, director of the impressionist and modern art department at Sotheby's, told AFP last week.
"It comes from a key era in Picasso's career, 1937, when he makes the great painting 'Guernica'," he added, referring to the masterpiece which portrayed the horrors of the Nazi bombardment of a Basque city during the Spanish civil war.
The painting also has a strong autobiographical appeal, according to Mackie.
But the looming figure of Dora Maar, whom he met in 1936, emerges in the shadows behind Marie-Therese, explained Mackie.
Several masterpieces have reached astronomical prices at recent auctions, fuelled by the opening of major museums in the Gulf and the purchasing power of collectors from emerging countries.
Saudi Crown Prince Mohammed bin Salman acquired Leonardo da Vinci work "Salvator Mundi" for $450 million in November 2017.
"The market for masterpieces is at an unprecedented levels, and this picture certainly sits very much in that masterpiece category," said Mackie.
Three other Picasso works also went under the hammer, including "Le Matador", which sold for £16.5 million (18.6 million euros, $22.7 million).