The family of Monika Samaan says the then-seven-year-old became ill after eating a chicken Twister from a KFC store in western Sydney.
Monika, who was in a coma for six months, is effectively now a quadriplegic and is severely brain damaged.
During a month-long trial in 2012, Monika's father told the court he and his wife, along with Monika's brother, were also sick after sharing her Twister.
KFC has fought the claim since it was launched, but the NSW Supreme Court on Friday found in favour of Monika's family.
The family is seeking $10 million in compensation. Damages have yet to be awarded.
KFC says it is deeply disappointed and surprised by the court's decision and intends to appeal against the ruling.