Source : Webster's Revised Unabridged Dictionary (1913)

Sheepskin \Sheep"skin`\, n.
   1. The skin of a sheep; or, leather prepared from it.

   2. A diploma; -- so called because usually written or printed
      on parchment prepared from the skin of the sheep. [College
      Cant]

Source : WordNet®

sheepskin
     n 1: tanned skin of a sheep with the fleece left on; used for
          clothing [syn: {fleece}]
     2: skin of a sheep or goat prepared for writing on [syn: {parchment},
         {lambskin}]
     3: a document certifying the successful completion of a course
        of study [syn: {diploma}]