The move comes amid protests that have erupted on dozens of campuses across the US over the “Israel”-Gaza war.
At Atlanta's Emory University, 28 demonstrators were arrested on Thursday after refusing to leave.
In New York City, Columbia University dropped a Thursday night deadline for an end the encampment on its campus.
In a statement, USC said it would "not be able to host the main stage ceremony that traditionally brings 65,000 students, families and friends" to its campus.
On Wednesday, police arrested at least 93 people at the campus for trespassing, and ordered the dismantling of an encampment.
USC announced earlier this month that Muslim student Asna Tabassum would no longer be permitted to deliver a speech as valedictorian due to unspecified security threats.
Demonstrators at Emory said they were supporting Palestinians but also voicing their objection to a police training center in Atlanta.
Plans for the center have been controversial locally and the project has been dubbed "Cop City" by opponents.
Emory's police force said protesters had "pushed past" officers protecting the area set up for commencement on Thursday morning.
The force acknowledged that chemical irritants had been released as part of crowd control measures, though they said the step had been taken after some members of the crowd threw "objects" at officers.
Atlanta Police also confirmed using chemical irritants but denied reports they had fired rubber bullets at protesters.
One protester shown on video being detained by police identified herself as Noelle McAfee, chair of Emory's philosophy department.
Ms McAfee said she was observing what she described as a peaceful protest when police began to move in and the protesters started to march.
"It went from a peaceful protest to mayhem in the matter of a minute," she said. She said she had frozen and been quickly detained.
The latest wave of campus protests began after officials at Columbia University called in police to clear a new protest encampment and more than 100 people were arrested.
Activists have been calling for universities to "divest from genocide" and to stop investing large school endowments in companies involved in weapons manufacturing and other industries supporting the entity’s war in Gaza.
The apartheid “Israeli” entity is currently facing a case brought by South Africa at the International Court of Justice [ICJ] for committing genocide against the Palestinians.
Chisato Mimura, a law student and protest leader at Yale University in Connecticut, told the BBC that activists were upset at President Joe Biden as well as their school officials for "quite literally funding and equipping the weapons used in genocide".
"What they're doing is completely putting their full weight behind it," she said. "We are well aware of the prominent role they are playing."
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