The former assistant football coach sued the university last year in the wake of the Jerry Sandusky child molestation scandal, Courthouse News Service reported.
McQueary claimed that president Graham Spanier's statements in 2011 made it look like McQueary was lying.
McQueary said in his suit that he saw Sandusky engage in illegal sexual conduct with boys ages 10 to 12 years old in 2001.
He claimed that he reported the incident to head coach Joe Paterno the following morning, the complaint indicates. But when the grand jury findings were made public in 2011, Spanier issued a statement suggesting that McQueary lied about reporting Sandusky and committed perjury during grand jury testimony.
McQueary was then placed on administrative leave, McQueary's suit said.
Although Penn State filed a motion to dismiss the lawsuit, Judge Thomas Gavin said McQueary made sufficient claims in the suit.The university has 20 days to respond.