McAdoo earned second-team All-Atlantic Coast Conference honors after leading the Tar Heels in rebounding and steals and finishing second in scoring in 2012-13.
The Norfolk, Va., native averaged 14.4 points and 7.3 rebounds and made 54 steals in leading UNC to a 25-11 record and the third round of the NCAA Tournament.
"Coach (Williams) and I have been talking about this since the end of the season and today my parents joined Coach and me in those discussions," says McAdoo. "I have decided to stay in school at North Carolina and play another season for the Tar Heels.
"I love this school and my teammates and I love being a North Carolina basketball player. There will certainly be a time when I want to play in the NBA, but right now I truly enjoy college life and I want to continue doing that for another season."
McAdoo scored in double figures a team-high 32 times, posted nine double-doubles and scored 20 or more points five times. He was fourth in the ACC in steals, ninth in rebounding and 12th in scoring. He has averaged 10.1 points and 5.5 rebounds in 74 games as a Tar Heel.
"I am ecstatic about having the opportunity to coach James Michael for another season," says Roy Williams. "He's an incredible young man who did some really nice things this year. He's going to be an even better player in the future. Coaching young people like James Michael is what makes me enjoy coaching so much.
"James Michael's decision says a lot about the University of North Carolina and his teammates. He truly enjoys the entire collegiate experience. It's the reason he came to this decision."
Last week, rising junior guard P.J. Hairston said he was returning next year. Earlier today, junior forward Reggie Bullock announced that he was entering his name into the 2013 NBA Draft.
"I'm certainly looking forward to coaching P.J. and James Michael again," says Williams. "They have grown a lot as young men in their first two years at Carolina and I expect them to be fantastic leaders for us next season."