Coach Bill Self said Friday the move was made for his "irresponsibility" and a "lack of respect" for the program and his teammates.
The school did not specify the nature of Graves' behavior.
"As of now, Jeff's status for the remainder of the year is undetermined," Self said. "There must be serious effort on his part to warrant his return to the basketball program."
Graves, a 6-9 senior, played in all five games this year, averaging 3.8 points and 4.0 rebounds in 15.2 minutes.
In the Jayhawks' NCAA Tournament run last season, Graves stepped in for the injured Wayne Simien and averaged 8.7 points and 9.7 rebounds. He had 16 points and 16 rebounds in their 81-78 loss to Syracuse in the championship game.
The seventh-ranked Jayhawks are off to a 4-1 start and will host Oregon on Saturday.