STATE COLLEGE, Pa. (AP) -- Michigan still has Penn State's number, and that adds up to another late-season collapse for the Nittany Lions.

	Michigan's Charles Drake tackles Penn State punt returner Bruce Branch in the first quarter.

Tom Brady's 11-yard touchdown pass to Marcus Knight with 1:46 left gave the Wolverines (No. 15 ESPN/USA Today, No. 16 AP) a 31-27 victory over Penn State (No. 8 ESPN/USA Today, No. 6 AP) on Saturday, their third straight over the Lions.

Michigan (8-2, 5-2 Big Ten) gave up a 10-point lead, then scored two touchdowns in less than two minutes to hand Penn State -- a national title contender two weeks ago -- its second straight loss.

"We were down to our last two possessions," Michigan coach Lloyd Carr said. "That's what it came down to."

Brady said the Wolverines are getting used to these roller coaster rides after up-and-down victories over Notre Dame and Indiana. He said he never gave up hope, even when Michigan fell behind 27-17 with nine minutes left.

"We've done that before," Brady said. "We're just battling and battling until that clock says 0:00. It might not always be pretty. You're going to make a lot of mistakes. You just got to find a way to win."

Brady started the comeback with a 12-play, 81-yard drive that ended with his 5-yard touchdown scramble, pulling Michigan within 27-24 with 3:26 left.

After Penn State went three-and-out, DiAllo Johnson returned the punt 24 yards to the Penn State 35, and Brady hit Knight with a 17-yard pass on third down to set up the TD that won the game.

Kevin Thompson drove Penn State to the Michigan 34 with a minute left, but Ian Gold stripped him of the ball and the Wolverines recovered.

Penn State (9-2, 5-2) rushed for seven yards on 20 carries, the worst under Paterno. The previous low was 19 yards against Alabama in the 1979 Sugar Bowl.

"The running game has been killing us," Paterno said. "We can't get anything on the ground, and that's dictating a lot of what people we doing."

Michigan, which had beaten Penn State by a combined 61-8 in the past two seasons, is only the second team to defeat a Paterno-coached team three straight years. Alabama did it from 1987-89.

For Penn State, the slide continues. The Lions couldn't bounce back from their last-second loss to Minnesota last Saturday.

"We were ready for this week and we played hard all four quarters," Thompson said. "We fought and fought and we were up -- and then we were down."

Now, they're left playing for pride. A visit to No. 17 Michigan State is next.

The script is much like 1997. Penn State started the year No. 1 only to lose three of its last five games.

"I'm more disgusted than upset this week," Mike Cerimele said.

Michigan also spoiled the final home game for Jerry Sandusky, who is retiring at year's end after 32 years as a Penn State assistant, including 23 as Paterno's defensive coordinator.

The Wolverines'Jim Herrmann had the better game plan in the end.

"We were blitzing left and right," said Gold, who had eight tackles and two sacks. "I have never seen a game plan where he made us come as much."

Brady finished 17-of-36 for 259 yards, two TDs and three interceptions. David Terrell had six catches for 133 yards, Knight caught five passes for 79 yards and two TDs, and Anthony Thomas rushed for 127 yards on 34 carries.

Brady gave Michigan a 17-7 lead on the opening series of the second half by hitting Marcus Knight for a 35-yard TD.

Then Penn State's defense, led by Brandon Short's 13 tackles, came alive.

The Lions pinned Michigan at its 9 and, after a deflected punt, got a 39-yard field goal by Travis Forney.

Penn State stopped Michigan again on the next series, and Thompson completed four straight passes, the last a 38-yarder to Eddie Drummond for a TD to tie the game at 17-17 with 2:09 left in the third quarter.

Thompson's passing moved Penn State downfield again on the next series, and Forney's 28-yard field goal gave Penn State its first lead, 20-17.

A minute later, Bhawoh Jue intercepted Brady's pass and returned it 46 yards for a touchdown to put Penn State ahead 27-17 with 9:44 left.

At the start, it was clear the Lions hadn't recovered from last week's upset loss to Minnesota. Against a ferocious Michigan defense, they actually looked as though they'd regressed.

The Lions fumbled on the first two series. First, Thompson and Eric Cole -- starting at center for the first time since last season -- botched a snap and Michigan recovered at the Penn State 21. On the next series, Cato June forced Eric McCoo to fumble at the Michigan 46.

The Wolverines turned the miscues into 10 points, Hayden Epstein's 33-yard field goal and Thomas' 2-yard TD run.

After Bruce Branch's 79-yard punt return for a touchdown -- his second of the year -- Penn State trailed only 10-7 at halftime.

Michigan held the Lions to 6 yards rushing in the first half and 1 yard in the second. Three times, they hit Thompson so hard that he was forced to the sidelines to recover. During halftime, he got five stitches to close a gash across his chin.

He finished 19-of-27 for 263 yards and a TD.

"I saw some hits on him that I didn't think he'd get back up," Carr said.

Penn State lost consecutive home games for the first time since losing to Wisconsin and Ohio State in 1995.