The Miners announced the decision Friday, the same day they began their first practice of the season.
Locksley had been suspended from the team after his arrest. He had been facing charges of driving while intoxicated, marijuana possession, unlawful carrying of a weapon and making a terroristic threat, according to jail records. USA Today reports that Locksley allegedly threatened to empty a handgun on people.
Athletic director Jim Senter said in a statement that the school believes Locksley's charges will be reduced.
"While the legal process has not come to a complete conclusion, we believe that the final charges against Kai will not be as severe as what has been reported," Senter said. "Young people make mistakes and it is important that they learn from these mistakes. We believe in restorative justice and feel that Kai will benefit more in the long run by getting the necessary support and guidance from his coaches and teammates, rather than being dismissed from the team."
UTEP coach Dana Dimel said Locksley now faces a zero-tolerance policy going forward.
"While we welcome Kai back to our football team, I want to make it very clear that he will have a list of expectations placed on him," Dimel said in a statement. "We will keep these expectations in-house, but a zero-tolerance policy will be in effect. The rest is up to Kai, but we're hopeful that he can come out of all this the best possible person and teammate."
A former ESPN 300 recruit, Locksley started eight games and appeared in nine for the Miners in 2018, leading the team with 937 passing yards and adding 340 rushing yards.
Locksley is the youngest of Maryland coach Mike Locksley. His older brother Meiko was killed in a September 2017 shooting in Columbia, Maryland.
Information from ESPN's Adam Rittenberg was used in this report.