A search for new heavy particles manifested as resonances in two-jet final states is presented. The data were produced in 7 TeV proton-proton collisions by the LHC and correspond to an integrated luminosity of 315  nb−1 collected by the ATLAS detector. No resonances were observed. Upper limits were set on the product of cross section and signal acceptance for excited-quark (q∗) production as a function of q∗ mass. These exclude at the 95% C.L. the q∗ mass interval 0.30<1.26  TeV, extending the reach of previous experiments.