In third year at Vanderbilt, which was his first head coaching position, Franklin was 24-15. The Commodores went 9-4 each of the last two seasons, winning the 2012 Music City Bowl and capping last season with a win in the BBVA Compass Bowl.
Franklin, a 41-year-old native of Langhorne, Pa., is credited with turning the Vanderbilt football program around. The Commodores had two winning seasons since 1976 until Franklin's second season as coach.
"I grew up watching Penn State football and now to be at the helm of such a storied program is a tremendous honor," Franklin said in a statement released Saturday. "It's important to me to be a part of a university that strives for excellence in everything they do.
"When football student-athletes come to Penn State, they have a unique opportunity to receive a premium education while playing at the highest level of competition."
Franklin, 41, replaces Bill O'Brien, who led Penn State after two seasons (15-9 total record). O'Brien left to become the head coach for the Houston Texans.
Penn State still has two years of a bowl ban, which was part of sanctions handed down by the NCAA following an investigation into child-abuse by former Penn State assistant coach Jerry Sandusky.
That scandal led to the firing of long-time Penn State Coach Joe Paterno and several school administrators. Sandusky was convicted of 45 charges stemming from child abuse. He was sentenced to 30-60 years in prison.