Royster's rushing totals enabled him to surpass the Penn State record of 3,398 career yards held by Hall of Famer Curt Warner.
Back-up quarterback Matt McGloin connected on 17-of-28 pass attempts for 250 yards for Penn State (5-3, 2-2 Big Ten), which was playing without injured starter Rob Bolden.
The Nittany Lions' win was the 399th of Coach Joe Paterno's career.
Denard Robinson threw for 190 yards and rushed for 191 more for Michigan (5-3, 1-3), totaling four touchdowns -- three of which came on the ground.
Despite Robinson's all-around performance, the Wolverines suffered their third loss in a row.