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I have created one entitlement process which has entry criteria & exit criteria for the SLA to be start and stop. 

Issue is: SLA is getting assigned upon case creation but it's not getting stoppped when the exit criteria happened on case. 

Case exits the process based on 'Custom Criteria when formula evaluates to true'. 

Question: The field which am referencing in custom formula is a PickList field and I would like to STOP the SLA based on one of the picklist values. But SLA is not getting stopped when I select the defined picklist values from the drop down on the case detail page.Not sure whether it's wrong with my formula field OR something other?

Please guide me with your thoughts!

Can you please include a screenshot of what your current entitlement process and the offending milestone configuration is?  When you say that your SLA isn't getting stopped, do you mean that your milestones are not getting removed / stopped when your entitlement process stops?  Is the Case.IsStopped value set to true when the formula evaluates to true?
Hi Pcon,

Here are the details of Entitlement Process & associated Milestone:

User-added imageUser-added image
I don't have any Actions defined under milestone. 

Here is my thoght: If I select the picklist value mentioned in 'exit the process', then 'CaseMilestone' should be 'completed', right? That's not happening currenlty. Here am NOT closing the case just trying to stop the MileStone upon on one pick list value. Is it possible to stop MileStone without closing the case?

Sorry for the really delayed response (I was on vacation and then Dreamforce).  I think the problem you are seeing is because your exit criteria is logically impossible.  It should read:
    ISPICKVAL(Vanguard_University_Status__c, ""),
    ISPICKVAL(Vanguard_University_Status__c, "Resourcing Complete")

You cannot have it be both, so you want to make your AND an OR