He had been the Nittany Lions' coach for the last eight seasons, but was in unable to overcome the shadow of long-time football coach Joe Paterno.
"This was a very difficult decision," said Dunn. "I am very appreciative of the opportunity Dr. Spanier and (Athletic Director) Tim Curley gave me to become the head coach at Penn State. I have greatly enjoyed my association with Penn State. I would like to have had more success over the past two seasons, but I am proud of our efforts and what we have accomplished over the past eight years."
Penn State was just 7-21 this season for the second year in a row, including a dismal 2-14 mark in the Big Ten. He had an overall record of 117-121, and was 45-87 in Big Ten games during his eight seasons as PSU head coach. He had spent the previous 12 seasons as a Penn State assistant coach under Bruce Parkhill.
He submitted his resignation to Curley.
"I appreciate what Jerry has done for the men's basketball program," Curley stated. "Jerry Dunn has been a member of the basketball staff and Penn State community for 20 years. I have a great deal of respect for Jerry. He has a great work ethic, strong character, and ran his program with class and dignity. We wish Jerry and his family the best in the future."
Dunn, 49, who also has been an assistant at George Mason, went to the postseason four times with the Nittany Lions. They advanced to the NIT Championship game in 1998, the NIT semifinals in 2000, the NCAA Sweet 16 in 2001.
Curley said a search committee has been formed to find Dunn's successor. Rumors have circulated that Duke assistant Steve Wojciechowski is a possible candidate.