"I'm staying at PSU because I am committed to the 2013 team," he said via text message.
O'Brien, who led Penn State to an 8-4 record despite dealing with severe NCAA sanctions in 2012, was said to be on the short list of several NFL teams with head coaching vacancies. According to various media reports, he interviewed with the Cleveland Browns and Philadelphia Eagles.
O'Brien's agent, Joseph Linta, told the Associated Press that the coach made the decision to stay at Penn State Thursday.
A former offensive coordinator of the New England Patriots, O'Brien was hired at Penn State last January -- as the Jerry Sandusky child sex abuse scandal was still unfolding. It was his first head-coaching job at any level. He had the difficult task of replacing Hall of Famer Joe Paterno and dealing with the significant fallout of the scandal.
Last July, Penn State was hit with unprecedented NCAA sanctions stemming from the scandal. Yet O'Brien kept most of the team together and the Lions managed to go 8-4 overall and 6-2 in the Big Ten.
Penn State was ineligible for the conference championship game or a bowl.
O'Brien was named Big Ten Coach of the Year and National Coach of the Year by the Maxwell Club of Philadelphia.
Earlier Thursday, one of Penn State's top committed prospects for its recruiting class of 2013 expressed little concern that O'Brien was going anywhere.
O'Brien is the Penn State football coach and I'll be playing for him, New Jersey defensive lineman Garrett Sickels told FOX Sports NEXT reporter Beth Long at practice for the U.S. Army All-America Game in San Antonio.