Speculation about his exit has flared for months, amid reports that Trump had cooled on the retired four-star general.
Many of Trump's friends and advisers have concluded the president doesn't really want a chief of staff - and he has several confidants urging him to operate without one.
But Trump has made a decision to stick with Kelly - for now, at least.
Kelly sought to bring rigid order and discipline to the West Wing, but Trump chafed under his restrictions, and Kelly found it impossible to contain the chaos that often is created by this president. "Today we celebrate his first full year as @WhiteHouse Chief of Staff!"
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Kelly's tenure was marred by his handling of the domestic abuse allegations against staff secretary Rob Porter, who resigned in February.
Kelly has improved Trump's White House, his allies say, but his influence is limited by some pretty fundamental differences in temperament and habit - Trump constantly watches Fox News and tweets while Kelly "rarely watches television and doesn't follow Twitter", Politico says.
The Wall Street Journal first reported news of Kelly's plans.
Kelly has been an influential force in the White House.
In the past, Trump has been coy about Kelly's role going forward.