First, you must ask yourself if you want to maintain the lines that give it the appearance of being paneling or not. If not, you will need to fill the lines with drywall mud. Either way, you will need to sand down the paneling, clean the paneling to remove dust particles, apply a base coat and paint.
We did this a long time ago and I strongly recommend using a primer. These days you can have the primer tinted to help with your finish color. There are some paints now that incorporate primer, but it depends on what contrasts you are working with. Is your paneling dark or light colored? I liked the outcome, but it was not a fun project!