Royster earned first-team All-Big Ten honors this fall after being named a second-team selection in 2008. He rushed for 1,169 yards despite working behind an offensive line that returned only two starters.
"I wanted to return to finish my degree and for my final year at Penn State," Royster said in a statement released through Penn State. "I'm looking forward to next season."
The Fairfax, Va., native had been projected as a mid-round selection in April's NFL draft.
Royster will be the focal point of a Nittany Lions offense that loses two-year starting quarterback Daryll Clark and will be young under center. The Doak Walker Award semifinalist has 2,918 career rushing yards at Penn State, needing only 481 to break Curt Warner's team record.
Adam Rittenberg covers the Big Ten for ESPN.com.