Gordon earned second-team All-Big Ten honors and was a semifinalist for the Doak Walker Award after rushing for 1,466 yards and 12 touchdowns this season. The Badgers will face South Carolina on Jan. 1 in the Capital One Bowl.
"I love the University of Wisconsin and feel that there is still a lot of room for growth," Gordon said in a statement released through the team. "Academically, another year in school will help me get closer to completing my degree, and on the field I hope to help my team get back the Big Ten championship."
Gordon leads the nation in yards per carry (8.1) and runs of 60 or more yards (4) and 70 or more yards (3). He had 140 yards or more in seven games, though his production slowed a bit in Big Ten play, as senior teammate James White surged.
Gordon said last week he was awaiting an evaluation from the NFL draft advisory board. After redshirting in 2011, he had a limited role last season but averaged 10 yards per carry.
He's the second high-profile Badgers running back to pass up the NFL draft in recent years. Montee Ball opted to stay with the Badgers after the 2011 season and won the Doak Walker Award as a senior.