Penn State, Houston and the bowl made the official announcements Sunday night on their respective websites.
The Nittany Lions (9-3, 6-2) finished tied with Wisconsin for first in the Big Ten Leaders Division.
But the program is in turmoil after former assistant coach Jerry Sandusky was charged last month with sexually abusing eight boys over a 15-year span. School trustees fired Joe Paterno in the aftermath of the charges amid mounting criticism that the Hall of Fame coach and other school leaders should have done more to prevent alleged abuse.
The Ticket City Bowl, played at the Cotton Bowl in Dallas, had the seventh selection out of bowls with Big Ten tie-ins, after the BCS games.
Despite the horror of the allegations against Sandusky, who retired in 1999, Penn State President Rodney Erickson and interim coach Tom Bradley said the team still deserved to play in a bowl game because the players had nothing to do with the scandal that has enveloped the school and its treasured football program.
Penn State announced last week it would donate its share of conference bowl proceeds this year - about $1.5 million - to the Pennsylvania Coalition Against Rape and the National Sexual Violence Resource Center. The revenue usually goes back to the athletic department.
School administrators believe "this opportunity is a fitting acknowledgement of the hard work, dedication and perseverance our student-athletes have exhibited during this especially challenging season," Erickson said Sunday night in a statement. "As Penn State continues to move forward from recent events we are committed to help break the silence that surrounds child sexual abuse and lead to better protection of our children."
Wisconsin and Penn State had identical 6-2 conference records, though the Badgers won the division after beating the Nittany Lions 45-7 in the last week of the regular season.
The only other Big Ten teams with fewer than three conference losses in the regular season were Michigan State (one) and Michigan (two).
Penn State also tied with Nebraska for the second-best overall record in the regular season in the conference at 9-3, behind the Spartans, Wolverines and Badgers, who all finished at 10-2.
Yet among potential landing spots, Penn State got bypassed by the Insight Bowl, which had the fourth selection and was to announce its pick later Sunday; and the Gator Bowl, which had the fifth selection and took Ohio State (6-6, 3-5) to face Florida. Former Gators coach Urban Meyer has agreed to take over the Buckeyes, adding to the allure for that game.
Ohio State lost to Penn State this season, as did Northwestern (6-6, 3-5), which was taken by the Meineke Car Care Bowl of Texas with the Big Ten's sixth bowl selection.
A conference call with Bradley and bowl president Tom Starr scheduled for Sunday evening was cancelled due to technical difficulties.
Houston (12-1) fell from a potential berth in the Bowl Championship Series to the Ticket City after getting upset by Southern Mississippi on Saturday in the Conference USA title game.
Now the Ticket City Bowl gets a relatively high-profile matchup between the Nittany Lions, who usually draw large postseason crowds, and the Cougars and star quarterback Case Keenum playing in their home state.
"Our goal from the start was to bring major college postseason football back to historic Cotton Bowl Stadium, and with this extraordinary matchup ... we believe we have accomplished that objective," Starr said in a statement.
Both schools have seemingly tentative coaching situations. Houston's Kevin Sumlin has been mentioned as a top candidate for high-profile openings, including Texas A&M, which fired Mike Sherman last week.
Bradley, Paterno's longtime defensive coordinator, has said he's interested in keeping the Penn State job permanently. The search has been called "wide open," and acting Athletic Director Dave Joyner said last week in a video on Penn State's athletic website that "everyone who is interested in the job can contact me."
Former Steelers coach Bill Cowher has been mentioned as a potential candidate. The NFL analyst for CBS declined comment Sunday to the AP through a network spokeswoman, who referred to Cowher's on-air comments Oct. 30 about other coaching vacancies.
"I am here to say to you today, I do not plan on coaching next year," Cowher said, according to a CBS transcript.
Another rumored candidate, Mississippi State coach Dan Mullen said in a statement through his school Friday that he had not been contacted by Penn State, and he was "very happy" with the progress of the Bulldogs program.
Mullen was Urban Meyer's offensive coordinator at Florida before coming to Mississippi State. Meyer is the incoming coach at Ohio State, Penn State's Big Ten rival.