School president Rodney Erickson said the monument divided the community because it served as a reminder of the alleged cover-up by Paterno and other school officials that allowed now-convicted retired assistant Jerry Sandusky to continue molesting boys.
Erickson said Paterno's name will remain on the campus library because it "symbolizes the substantial and lasting contributions to the academic life and educational excellence that the Paterno family has made to Penn State University."
The family released a statement saying the decision to remove the statue doesn't serve the victims, and that they can only be served by uncovering the truth.
The statue's sculptor, Angelo Di Maria, said he was upset to hear that the statue had been taken down.
"It's like a whole part of me is coming down. It's just an incredibly emotional process," he said.
The bronze sculpture had been a rallying point for students and alumni outraged over Paterno's firing four days after Sandusky's Nov. 5 arrest - and grief-stricken over the Hall of Fame coach's Jan. 22 death at age 85.
Meantime, the NCAA says it will levy "corrective and punitive measures" against Penn State in the wake of the scandal. The organization announced Sunday that it would spell out the sanctions on Monday but disclosed no details.
The Associated Press contributed to this report.