Groce's salary will increase to $1.2 million a year. His contract now runs through April 2018. In Groce's first season, Illinois finished 23-13 and defeated Colorado in the NCAA tournament before falling to Miami.
Illinois on Wednesday also said Western Michigan forward Darius Paul and Oregon State guard Ahmad Starks had officially transferred to join the Illini.
Paul is the younger brother of former Illini star Brandon Paul. The 6-8, 220-pound forward was the Mid-American Conference freshman of the year last season after averaging 10.4 points and 5.7 rebounds a game. The Gurnee native will have to sit out a season under NCAA rules.
Starks is a 5-9, 170-pound Chicago native with a year of eligibility. He averaged 12.1 points a game last season for the Beavers.
Starks has said he plans to apply for an NCAA waiver because of an ailing grandmother in Chicago. That could let him play next season.
Groce said sophomore forward Myke Henry has left Illinois.