Head coach Kalani Sitake made the announcement about the fifth-year senior at the end of the Cougars' practice Tuesday.
Tanner Mangum was also competing for the starting job. The sophomore took over as starter in 2015 after Hill suffered a season-ending foot injury in the opener.
Hill was awarded an extra year of eligibility with a medical exception.
Three of Hill's seasons at BYU have concluded early with season-ending injuries, but in 2013 he threw for 2,938 yards and rushed for 1,344 with 29 combined touchdowns.
Sitake told the media after practice Mangum will not redshirt and will be the Cougars’ backup quarterback.
“Tanner is obviously a big part of the program going forward,” offensive coordinator Ty Detmer said, as reported by the Salt Lake Tribune.
In the 2015 opener against Nebraska, Hill threw for 268 yards, ran for 72 yards and scored three touchdowns. He limped to the locker room early in the second quarter and eventually left the game in the second half, his season over with a foot injury.
Mangum took over and threw for 111 yards, including a 42-yard, game-winning Hail Mary as time expired. He finished 2015 by throwing for 3,377 yards and 23 touchdowns.
BYU kicks off its season Sept. 3 against Arizona.
Standard-Examiner reporter Brett Hein contributed to this report.