Gray enlisted in the Navy when he turned 18 after the 1942 season. Gray was assigned to the Great Lakes Naval Training Station where he pitched for the Great Lakes team managed by Mickey Cochrane. Tigers pitchers Schoolboy Rowe and Dizzy Trout also pitched for Cochrane's star-studded Great Lakes team. Gray was transferred to the New Hebrides in the Pacific Theater, where he continued pitching for the Navy. He won 12 straight games and averaged 17 strikeouts per game in his Navy career. In January 1945, he pitched for the Navy All Stars. He lost his first game against the Army All Stars 3–1 despite striking out 19 batters. In three games against the Army All Stars, Gray had a 1–2 record and a remarkable 46 strikeouts. After the series, The Sporting News reported: "You can’t tell any of the fellows in this war sector that when peace is restored, Ted Gray won’t match the records of Grove, Hubbell, Pennock, Newhouser and the other great ." (The Sporting News, February 22, 1945.)
