Undo the screws in the paneling. If the paneling was attached with masonry screws, these will need to be removed. Use a drill and set it to reverse and pull out all of the old screws.
Pry the panels down. If the panels were nailed or glued into place, they will have to be pried away from the wall. Insert a pry bar into one corner and pry out toward yourself. This should pop the panel away from the wall. If the adhesive is stubborn or the paneling is weak, you may have to simply tear chunks away by hand. Wear gloves to protect your hands and safety glasses to protect your eyes from flying debris.
Remove any adhesive left behind. If the paneling was glued, you might have spots of adhesive on the walls. Use low odor mineral spirits, opening any windows in the room and turn on a fan. Let this set for five minutes and then scrape away the adhesive with a plastic putty knife.
Fill in any holes in the wall. If the panels were attached with masonry screws, you will need to do a little patch work. Brush the walls clean and apply mortar over the holes. Let this set according to manufacturer instructions. You'll now have a wall ready to prime and paint or you can just leave it bare.