The spelling 'gray' is mostly used in the United States.

'Grey' is the preferred spelling in the United Kingdom and many other countries.

'Gray' is used for a color, while specific names and terms use 'grey.'

"Gray" and "grey"are both correct spellings of the word for the neutral or achromatic color—a color “without color" between black and white, like a cloud-covered sky, ashes, or lead. Used for centuries, both "gray" and "grey" come from the Old English word grǽg and are related to the Dutch word grauw and the German word grau.

The main distinction between the two spellings is simply a matter of geographical custom. While both spellings are commonly used throughout the English-speaking world, the use of "gray" in the United States versus "grey" in most other nations has remained constant.

Of course, as is usually the case in things grammatical, there are certain exceptions and rules of usage for "gray" and "grey" that should be observed.

The spelling "gray" (with an “a”) is more common in American English. Therefore, if you are writing for an American audience, use "gray" when you mean the color.

In the United Kingdom and where other variants of English are used, "grey" is the preferred spelling of the color word—and has always been. But because of the widespread adoption of the American spelling in the United States, the number of instances of the British spelling in English-language texts started declining in the 1880s.

What it comes down to is that if you're writing for a British audience—or in a location that uses British spellings of words, such as Canada or Australia—you should use the U.K. spelling.

"Gray" and "grey" are flexible. For the purposes of these examples, we'll use the American "gray," but know that "grey" can take its place.

When used as a noun, it typically refers to a shade of the color itself, as in, “The walls were painted an ominous shade of gray” or "a fight between the Blue and the Gray" in the American Civil War.

As an adjective, it can describe an object or person as being without interest or character, as in, “They marched onward, as a line of gray, faceless men.” 

Used as a verb, it can refer to the aging process, as in, “David’s hair began graying when he was a teenager.”

Though the use of "gray" and "grey" is still often confused and debated, as long as they are used in reference to the color, they can actually be used interchangeably anywhere in the English-speaking world. So, if you write, “The Queen wore a gray dress,” in London, you might be considered a rebel, simpleton, or tourist, but you would not be wrong. ​

A simple trick for remembering this is that gray is typically used in America, while grey is typically used in England.

Though you can use either "gray" or "grey" in your daily writing and get by, there are a handful of instances where they are not interchangeable. When getting specific with color, "gray" and "grey" can be used to denote different shades or hues, with "gray" being a simple mixture of black and white and "grey" containing a little blue. For example, paint chip sample cards or fabric swatches often show a range of shades using both "gray" and "grey."

Still, that is a very specific case. The following are more straightforward instances where the "a” and “e” cannot be mixed:

So, why are some words like “gray” and “grey” customarily spelled differently in America than in Great Britain? Why, for example, does “color” become “colour,” “organize” become “organise,” and “liter” becomes “litre?” In most cases, Noah Webster, of Merriam-Webster dictionary fame, is to blame.

Until the 18th century, people on neither side of the Atlantic were too concerned with how words were spelled. Since only the most educated few learned to write at all, the spoken word was much more important to them than any type of “proper” spelling. In 1775, British lexicographer Samuel Johnson published his A Dictionary of the English Language. While the groundbreaking work took a few decades to catch on, the British eventually began working toward uniform spelling standards.

By the time Johnson’s Dictionary had gathered momentum, Americans were considering a revolt against British colonial rule. After winning their hard-fought independence, it only seemed natural that Americans should have their own spellings, too. Noah Webster led the movement. “As an independent people, our reputation abroad demands that, in all things, we should be federal; be national,” he wrote in a 1789 essay urging spelling reform, “for if we do not respect ourselves, we may be assured that other nations will not respect us.” 

Webster wanted the American version to be free of the “clamor of pedantry” he thought marked the English language. In part, this required removing the “unnecessary—usually silent—letters in words such as “colour,” “catalogue,” and “programme.” Webster made these spellings “official” in 1806 when he published the first American dictionary, A Compendious Dictionary of the English Language.