Penn State is immediately eligible for the postseason and is allowed to have the full 85 scholarship allotment beginning next season. The Big Ten also reinstated Penn State's eligibility for the conference's 2014 championship game.
The status of the 112 victories from 1998-2011 that the school was forced to vacate as part of the NCAA's sanctions will not be altered.
The changes reflect recommendations made by Penn State athletics oversight monitor George Mitchell in his second annual report about the school's response to the Jerry Sandusky scandal. Mitchell released his report Monday.
The NCAA also said Mitchell's oversight could end "substantially earlier" than the scheduled year of 2017.
The decision effectively concludes the sanctions imposed against the program as punishment for the Sandusky scandal. In 2012, following the release of the Freeh Report, the NCAA gave Penn State a four-year postseason ban, restricted the team to 65 scholarships per year through 2017 and fined the team $60 million, among other minor sanctions.
The NCAA restored some of Penn State's scholarships last season and had said the bowl ban could be reduced in the future. In July, several U.S. senators wrote a letter to NCAA president Mark Emmert requesting the sanctions be rescinded. It was reported late last month that the team's bowl ban could be reduced if Mitchell's upcoming report was favorable.
Sandusky, who was formerly a longtime defensive coordinator for Penn State, is currently serving a 30- to 60-year prison sentence after he was convicted on 45 counts of sexual abuse in 2012.
Penn State is now eligible this season to play in a bowl game, the Big Ten championship game and the College Football Playoff should it qualify for any of the three after this season. In their first year under head coach James Franklin, the Nittany Lions are 2-0.
- Ben Estes