Hibs’ Scottish Cup-winning former captain had agreed in principle to take the job on a permanent basis after ending the season in caretaker charge.
Discussions about the 36-year-old Edinburgh native’s backroom team are continuing, with an official announcement to follow once concluded.
Gray stepped in for a fourth spell as interim boss after Nick Montgomery was sacked in May.
The former right-back began his playing career as a youth with city rivals Heart of Midlothian before spells with Manchester United, Royal Antwerp, Crewe Alexandra, Plymouth Argyle, Preston North End, Stevenage and Burton Albion.
However, it was after moving to Easter Road in 2014 that he enjoyed most success, captaining the first Hibs side to win the Scottish Cup in 114 years and scoring the added-time winner against Rangers in the 2016 final.
Gray became a first-team coach after retiring from playing in 2021 and has a record of five wins, three draws and four defeats while caretaker following the departures of Jack Ross, Shaun Maloney, Lee Johnson and Montgomery.
Hibs finished the season with a home win over Motherwell and draw away to Livingston under his charge as they ended the campaign in a disappointing eighth place in the Scottish Premiership.
“It is a real privilege for me to become the head coach of this great football club,” said Gray.
“Everyone knows how much Hibs means to me. It is a massive club with a phenomenal fanbase, that I know very well – so to be given this opportunity is a true honour.
“From being here as a player and a coach for over 10 years, I know what a successful Hibs team looks like and I am determined to succeed and take our club forward.”
Following Hearts’ blueprint? – analysis
Ten years on from making his debut for Hibs as a player, the time has now come for Gray to take on the manager’s job at Easter Road. One of the hottest seats in Scottish football.
Many will say this is a risk for the club – and they would be right. But isn’t every managerial appointment a risk of some sort? Absolutely.
However, since Jack Ross was cruelly shown the door in December 2021, just 10 days before a League Cup final, Hibs have jumped around to try to find the one person that can set alight the club’s vision for success.
And, after hanging up his boots as a player three years ago, Gray has been listening, watching and hopefully learning how he can make an impact as permanent team boss if the opportunity arises. Now it has.
In making this move, the Hibs board may well have taken a look at what happened across the city with rivals Heart of Midlothian when they appointed the inexperienced Steven Naismith as head coach.
Not every Hearts fan was in agreement and patience was required. But, in the end, it paid off handsomely.
The Gordon family have to be applauded for their continued investment in Hibs.
Along with the Bill Foley/Black Knights investment, Hibs are in a stable situation financially and will be hoping the appointment of Gray, given his legendary status at Easter Road, will have fans flocking to buy season tickets ahead of the new season.
The job Gray has landed is one of the big five in Scotland, but that comes with a responsibility and accountability with every new signing and every starting XI scrutinised by the Hibs faithful and beyond.
It’s evident now that new managers at any club are given a very short honeymoon period by supporters in terms of making sure the team they put out on to the pitch delivers.
Before their first match in the League Cup against Elgin City next month, Gray will have an eye on who he wants to keep from what was a bloated squad at the end of last season and who he wants to bring in.
That is where the new sporting director, Malky Mackay, could be invaluable given his experience and extensive contacts throughout the UK and abroad.
However, whatever happens, Gray certainly won’t fail due to lack of effort or application. The same attributes he had as a player will now follow him into the managerial hotseat.
Mackay said Gray “emerged as our preferred candidate” after “a robust recruitment process”.
And he added: “David understands the pressures and demands that comes with a club like Hibs, knows Scottish football inside out, is an excellent coach and a strong man manager.”
Is Gray the right choice?
The Scottish Cup-winning captain is the club’s sixth manager in just over four years.
What do you make of the appointment of the Hibs legend? A risky move or are you in favour of the board taking a different direction?