Morelli's junior year at Penn State got off to a good start. He threw a 42-yard touchdown on his first pass as the Nittany Lion's starting quarterback in a 34-16 win over the University of Akron. However, he struggled after that, particularly in a 28-6 loss to rival Ohio State. With the Lions down 14-6, Morelli threw two late interceptions that Ohio State returned for touchdowns, effectively ending any hopes of a comeback and making the game look a lot more lopsided than it was. Morelli finished the game with only 106 yards passing. As a result of this performance, Morelli's play had become a polarizing issue amongst Nittany Lion fans. Some fans wanted to bring in backup Daryll Clark, a redshirt freshman whose style of play resembles that of Morelli's predecessor and former Heisman hopeful, Michael Robinson. Other fans have come to Morelli's defense, pointing out the amount of playing time typically required to develop good quarterbacks. By season's end, Morelli had thrown for 2,424 yards, 11 touchdowns and 8 interceptions. He took over third place on Penn State's season passing yardage list, trailing only Kerry Collins (1994) and Tony Sacca (1991). Despite his relatively decent statistics, Morelli expressed frustration over the conservative nature of Penn State's play calling in a November 2006 interview with the "Pittsburgh Tribune-Review". After struggling all season, Morelli was able to redeem himself during the 2007 Outback Bowl against Tennessee, leading the Nittany Lions to an upset victory.