Coach Roy Williams said Thursday that Graves didn't comply with team rules, though he says in a statement from the school that it had nothing to do with "any NCAA matters on campus."
"I hate this for Will," Williams said in the statement. "He worked extremely hard this summer to get himself physically in the best shape he's been in years, but he did not do everything he needed to do to be a part of our basketball program."
The NCAA is investigating the football program for improper benefits and possible academic misconduct involving a tutor. The school has said that tutor didn't work with any men's basketball players.
Graves was the team's third-leading scorer with about 10 points per game and was the team's top 3-point shooting threat.
Two seasons ago, Williams suspended Graves at midseason for not complying with team standards, sidelining him during the run to the 2009 national championship.
Information from The Associated Press was used in this report.