The Heisman Trophy winner will return to USC for his senior season and try to lead the Trojans to an unprecedented third straight national championship.
"I went with my gut. I went with my heart," the quarterback said.
Leinart opted to complete his eligibility rather than enter the NFL draft, where he figured to be one of the top selections in April and become an instant millionaire.
Instead, he'll have a chance to become just the second two-time Heisman winner.
Mostly, though, Leinart was just having too much fun to leave.
"I realized the opportunity right now to support my family by going to the NFL early, but to me I think college football and this whole atmosphere here and being with my friends and my teammates ... is ultimately more satisfying and will make me happier than any amount of money could make someone happy," he said.
There was a roar of approval from a crowd of about 500 students and fans jammed into the foyer at Heritage Hall to hear Leinart's decision.
"OK, so I'm smiling," a beaming coach Pete Carroll said after Leinart's announcement.
"I don't think it was too difficult a decision -- to make millions of dollars or be one of the best college football players of all-time," All-American defensive tackle Shaun Cody said. "You can't go wrong either way."
Leinart has made clear for months his desire to stay in school. He said last August he would definitely return because he loved playing for the Trojans, he needed to get stronger physically and make other improvements.
More recently, he said he was leaning toward returning but would investigate his options.
In the end, Leinart decided the risk of serious injury or a sub-par performance next season was worth it.
A 6-foot-5, 225-pounder, Leinart was a third-year sophomore who hadn't thrown a pass for the Trojans when he succeeded Palmer, another Heisman Trophy winner, as USC's starting quarterback 16½ months ago.
The Trojans have a 25-1 record with Leinart at the controls -- including 13-0 this season. He capped the year by passing for 332 yards and an Orange Bowl-record five touchdowns in USC's resounding 55-19 victory over Oklahoma on Jan. 4.
Leinart's 6,878 career passing yards rank fourth on the school's career list, and his 71 TD passes rank second -- one behind Palmer.
All that in just 26 games.
Two other USC juniors, linebacker Lofa Tatupu and punter Tom Malone, also announced decisions on their futures. Tatupu said he is making himself eligible for the NFL draft, while Malone said he will return to USC.
By staying in school, Leinart could join Ohio State running back Archie Griffin as the only two-time Heisman winners. Griffin did it in 1974-75.
He also becomes the second straight Heisman winner to play another year of college football. Oklahoma's Jason White won the award in 2003 before finishing third in the 2004 Heisman balloting.
What Leinart gives up by staying in school is a heap of money.
"I get $950 a month," Leinart said, referring to his stipend and drawing laughs from the assembled media at Heritage Hall. "Come on, $950 a month, we've got a training table, we've got food.
"The money is not important to me. I realize the opportunities. ... My teammates and being here is more important to me right now," he said.
Leinart passed for 3,556 yards and 38 touchdowns with nine interceptions in his first season as the starter, no doubt helped by the presence of talented and experienced wide receivers Mike Williams and Keary Colbert.
As a fourth-year junior this season, throwing to a corps of young, inexperienced wideouts, Leinart passed for 3,322 yards and 33 TDs with six interceptions.
Leinart's return means John David Booty, a former Louisiana prep standout who will be a third-year sophomore next season, will be relegated to No. 2 on the depth chart.
Booty is considered a better prospect now than Leinart was when he took over.
The Trojans will have two other highly regarded quarterbacks on the roster next fall in Rocky Hinds, a freshman who redshirted this season, and Mark Sanchez, who will be a freshman. Sanchez, a senior at Mission Viejo, Calif., High who has committed to USC, is considered one of the best prep quarterbacks in the country.
Even without Leinart, USC figured to enter next season No. 1. With Leinart, the Trojans will be a heavy favorite to win a third straight national title.
USC will bring a 22-game winning streak into next season -- longest in the country.
What more could a guy from Santa Ana, Calif., ask for?
"This is the greatest time of my life, being in L.A. I'm close to home," Leinart said. "My family, my friends, everyone's here. I think that alone is enough motivation for me to come back."