Workers lifted the 7-foot-tall statue off its base and used a forklift to move it into Beaver Stadium as 100 to 150 students watched, some chanting, "We are Penn State."
The university announced earlier Sunday that it was taking down the monument in the wake of an investigative report that found the late coach and three other top Penn State administrators concealed sex abuse claims against retired assistant coach Jerry Sandusky.
Meanwhile, the NCAA said it would levy "corrective and punitive measures" against Penn State in the wake of the child sex-abuse scandal involving Sandusky, a former assistant coach. The organization announced Sunday that it would spell out the sanctions on Monday but disclosed no details.
NCAA President Mark Emmert hasn't ruled out the possibility of shutting down the Penn State football program, saying he had "never seen anything as egregious."
The Paterno family issued a statement only hours later saying the statue's removal "does not serve the victims of Jerry Sandusky's horrible crimes or help heal the Penn State community."
"We believe the only way to help the victims is to uncover the full truth," said the family, which vowed its own investigation following the release of the report by former FBI director Louis Freeh. The family called the report "the equivalent of an indictment — a charging document written by a prosecutor — and an incomplete and unofficial one at that."
Paterno's widow, Sue, and two of the Paternos' children visited the statue Friday as students and fans lined up to get their pictures taken with the landmark. The statue, weighing more than 900 pounds, was built in 2001 in honor of Paterno's record-setting 324th Division I coaching victory and his "contributions to the university."
Construction vehicles and police arrived shortly after dawn Sunday, barricading the street and sidewalks near the statue, erecting a chain-link fence then concealing the statue with a blue tarp. Workers then used jackhammers to free the statue and a forklift to lower it onto a flat-bed truck that rolled into a stadium garage bay about 100 feet away.
Many of those watching the removal stared in disbelief and at least one woman wept, while others expressed anger at the decision.
"I think it was an act of cowardice on the part of the university," said Mary Trometter of Williamsport, who wore a shirt bearing Paterno's image.
She said she felt betrayed by university officials, saying they promised openness but said nothing about the decision until just before the removal work began.
Dozens later gathered to watch workers remove Paterno's name and various plaques from the concrete walls behind the statue. Much of the work was hidden by blue tarps strung across temporary chain-link fences, while barricades kept observers on the other side of the street. Few watching said they understood the decision and feared what kind of punishment the NCAA would pile on.
Derek Leonard, 31, a university construction project coordinator who grew up in the area, said the construction workers on the project told him it was like watching a funeral when the statue was lowered onto the truck and then rolled away. He didn't completely agree with the decision but worried more that the NCAA would shut down the football program.
"It's going to kill our town," he said.
Richard Hill, 67, of West Chester, a Penn State alumnus, said, "If you punish the football program or Joe Paterno — they're tied together — this town is going to suffer. The revenue does an awful lot to keep this town viable and lively."
Diane Byerly, who traveled from Harrisburg in the morning when she heard the statue was coming down, wondered if the university was trying to make a symbolic gesture in hopes of lessening the NCAA's penalty.
"Maybe it was an olive branch," said Byerly, 63, a one-time season ticket holder whose father and son went to Penn State. "Maybe they'll go softer on us."