Gray, 24, is a former Middlesborough youth player, who began his career with Darlington in the 2011-12 season, and is a son of ex-NI forward Philip Gray.
Lurgan Blues manager Gary Hamilton also revealed on Wednesday night that Kevin Braniff had been transfer-listed by the club at his own request.
The 34-year-old wants to play more regular first-team football.
"Kevin is still part of my plans but, at 34 years old, he wants to be playing every week and I can't guarantee that for him," explained Hamilton.
"I know exactly how he feels as I felt the same way when I joined Glenavon at the age of 32 so if a player wants to move for the same reason I did, there's no way I could stand in his way.
"If the right offer comes along to suit both parties we'll consider it."
Despite being born in England, Gray has represented Northern Ireland at Under-16, U17, U19 and U21 levels.
Glenavon lie in a disappointing seventh place in the Premiership before Friday's game against Cliftonville.
Last week, the mid-Ulster outfit announced that ex-Northern Ireland international Pat McCourt would be leaving the club.
Glenavon have announced the signing of former Northern Ireland Under-21 striker James Gray from Southport.