The stolen work was one section of a three-panel tapestry titled "Pond in Golden Gate Park," created by local artist Mark Adams who passed away in 2006.
The tapestry, valued at $250,000, was commissioned by the San Francisco Arts Commission for display at San Francisco International Airport.
It was temporarily on display in the Moscone Center when one of the panels was stolen in 2000. The artist eventually recreated the stolen tapestry, and the piece is currently on display in Terminal Two of SFO.
Adams' estate was contacted earlier this month by someone claiming to possess the stolen panel, police said.
Undercover officers contacted the suspect, who was allegedly offering to sell the stolen artwork. Margarita Andino, 51, was arrested on suspicion of possessing stolen property. The panel, valued at $75,000, was safely recovered with the assistance of the Arts Commission, according to police.