Gray, a four-time All Australian and triple club champion, will play his last AFL game on Saturday night against Adelaide.
The 34-year-old told teammates of his decision before Port's training session on Tuesday.
"I'm incredibly grateful for the opportunities I've had over the journey with this club," Gray said in a statement.
"I have got some amazing friends and memories that I'll take with me forever.
"But it's time for others to get their chance now."
The 270-gamer will end his AFL career second on the club's all-time goalkicking list behind Warren Tredrea and having played the fourth-most AFL games for the Power.
Port coach Ken Hinkley lauded Gray's influence on the club.
"I said last week that in my opinion Rob has been the greatest player at our football club in the AFL era and I stick by that," Hinkley said in a statement.
"His record demands that kind of recognition.
"I have never seen anyone who can make our great game look so simple and do such difficult things with such ease.
"We have been able to count on him to deliver in the big moments and he has won so many awards and accolades, yet he remains the most humble, team-first player."
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