NEW HAVEN, Conn.—Yale Law School is ending its policy of not working with military recruiters after a court ruling last week jeopardized about $300 million in federal funding, officials said Sept. 19.

Yale and other universities have objected to the Pentagon policy that allows gay men and women to serve in the military only if they keep their sexual orientation to themselves.

The 2nd U.S. Circuit Court of Appeals ruled against Yale Sept. 17, rejecting its argument that its right to academic freedom was infringed by a federal law that says universities must give the military the same access as other job recruiters or forfeit federal money.

The funding loss would have devastated the university’s medical research into cancer, heart disease and other illnesses, officials said.