"I am happy and extremely grateful to be the head coach at Butler University, and I am already looking forward to next season and the start of our postseason workouts in April," Stevens said in a statement.
Illinois has been conducting a coaching search since firing Bruce Weber after nine seasons on March 9.
VCU coach Shaka Smart had been offered the position, according to reports, but he released a similar statement Wednesday saying he was staying put at VCU.
Ohio coach John Groce is among Illinois' targets now, according to reports. Groce coached the Bobcats to the NCAA tournament's Sweet 16 this season.