College sports' governing body fined the university 60-million dollars.
The penalty comes after a recent report found several top officials covered up Sandusky's abuse when they learned about it. Legendary coach Joe Paterno was among those blamed in the cover-up.
And as a result, the NCAA also took away his title of winningest coach in major college football history.
"The NCAA vacates all wins of the Penn State football team from 1998 to 2011, and the records will reflect these changes," said Mark Emmert, NCAA President.
The NCAA has also banned the school's team from any postseason games for four years.
The organization says Penn State will also have to cut the number of its yearly football scholarships from 25 to 15 a year for a four-year period.
To reduce the impact on student-athletes, the NCAA says it will allow incoming and current Penn State football players to transfer to another school to compete.
The Big Ten conference added its own sanctions against member Penn State after the NCAA announced its penalties today.
Penn State will not be allowed to participate in the Big Ten conference title game for the same four years in which it is banned from post season bowl games by the NCAA.
Penn State will also not be allowed to share in the conference's bowl revenues for those four years, about a $13 million hit, according to a Big Ten press release. That money will be donated to children's charities, the release said.