The skit, on Thursday, featured the late night host arriving to McConaughey's class where he teaches Script to Screen at UT's Moody College of Communication.
The actor makes Fallon take off his Yankee hat and replace it with an orange Longhorn one.
McConaughey quickly becomes frustrated with Fallon who doesn't take the class seriously as he is disruptive and chooses to use a giant pencil.
"You are in fact, easily the worst student I've ever had," McConaughey says after kicking him out.
The duo then appeared in front of UT students with Fallon performing "The Eyes of Texas" on guitar. The students sang along to the performance which ended with Fallon and McConaughey beating a giant drum.
McConaughey also sat down with Fallon to discuss his love of Austin, why he chooses to live there and teaching Script to Screen.
"One of the great things about Austin is to make it here, all you really got to do is be yourself. You can be a cowboy, you can be a hippie, you can be an American Indian, an Asian, lesbian, white, black, brown, yellow, a blue-haired dwarf, and you are welcome in Austin," he said.
McConaughey posed with Fallon and a crowd of UT students to take his first Instagram selfie.