William Gray was born near Gawler, South Australia. He obtained his Bachelor of Arts from the University of Adelaide and graduated in Divinity from Union College in 1880, the first Presbyterian student to complete the course. He spent 1881, the year of his ordination, in medical training at Adelaide Hospital and as Minister to the congregations of Goodwood and Mount Barker. He married Elizabeth McEwen in 1882 and shortly after they sailed for Weasisi, Tanna, New Hebrides in the 'Dayspring'. Gray was the first Presbyterian Church of South Australia missionary to the New Hebrides. He produced a grammar, primer, hymnal and translation of Luke's Gospel in the Tanna language. Six of his seven children were born on Tanna. At the age of 71 Gray became head of the Smith of Dunesk Presbyterians Mission which later became the nucleus of John Flynn's Australian Inland Mission.

Gray was an outspoken advocate for the end of the Melanesian labour trade.