Towles had started 22 consecutive games before being replaced by redshirt freshman Drew Barker last week against Charlotte, but finished Saturday's 38-24 season-ending loss to rival Louisville.
The Fort Thomas, Kentucky, native has career totals of 5,099 passing yards and 24 touchdowns — including 2,148 passing yards and nine TDs this season. He also rushed for 353 yards and 11 touchdowns.
Stoops thanked Towles in a news release Sunday and said he understands his decision.
Towles will earn a political science degree next month and have one season of eligibility remaining. He thanked Stoops and others in a statement, adding "I will truly bleed blue 'til the day I die."