The 6-foot-8 forward announced via Twitter on Saturday that he was taking his name out of the NBA draft and returning for his sophomore year with the Wildcats.
"Last year was an unbelievable experience, but we left a lot on the table," Jones said. "I've decided to come back and help us get back to the Final Four and bring the Big Blue Nation a national championship."
Jones averaged 15.7 points, 8.8 rebounds and 1.9 blocks last season, and set a school freshman record by pouring in 35 points in a victory over Auburn in January. He was chosen SEC Newcomer of the Year by The Associated Press.
He took on a lesser role in the postseason, a move coach John Calipari said was vital to helping the Wildcats reach their first Final Four in 13 years.
Calipari, who was attending the Kentucky Derby on Saturday afternoon, praised the decision through his own Twitter account.
"I'm very happy for Terrence and his family because he did the right thing for his future but he had to come to that conclusion," Calipari wrote.
Underclassmen have until midnight on Sunday to take their name out of the draft pool.
Knight announced Friday he would remain in the draft while Liggins will make a decision after completing a pre-draft camp.
Even if Liggins joins Knight in the pros, Kentucky should be loaded next season. The Wildcats welcome another high-profile group of freshmen in the fall led by point guard Marquis Teague and forwards Anthony Davis and Michael Gilchrist.