Theodore Grant Gray was born in Aberdeen, Scotland, on 31 January 1884, the son of Henry Gray, a blanket factor, and his wife, Helen Mackay. He was educated locally and graduated in medicine from the University of Aberdeen in 1906. He then spent a short period in general practice before being persuaded to work at Kingseat Asylum, Newmachar. The ordered, regular routine of a self-contained mental hospital suited Gray. This was the first British psychiatric hospital built entirely of villas that segregated patients according to diagnosis, behaviour, dependency and gender. He was later to foster this system in New Zealand, and to give the name Kingseat to a new hospital at Papakura.
In 1911, having acquired a certificate from the Medico-Psychological Association of Great Britain and Ireland, Gray was recruited by the Mental Hospitals Department in New Zealand. There he served as junior assistant medical officer at Porirua Mental Hospital and senior assistant medical officer at Auckland Mental Hospital. He then worked under Frederic Truby King at Seacliff Mental Hospital, near Dunedin. From 1916 to 1918 Gray saw military service in France as a captain in the New Zealand Medical Corps. He had married Catherine Amelia Sutherland at Dunedin on 14 October 1914.
In 1921 Gray became medical superintendent of Nelson Mental Hospital; he planned to replace it with a villa hospital at Stoke. Truby King, now acting inspector general of mental defectives, considered Gray a promising administrator. He was appointed acting medical superintendent of the Auckland Mental Hospital in 1925 and shortly afterwards deputy inspector general of mental defectives. Gray succeeded King as permanent head of the Mental Hospitals Department in 1927.
In the 1920s Gray was involved in planning changes to services for the intellectually handicapped. He gave evidence to the Committee of Inquiry into Mental Defectives and Sexual Offenders in 1924, and wrote an influential report on an overseas study tour in 1927. His approach was informed by some of the more severe aspects of the eugenicist movement. He proposed separate 'farm colonies' for the intellectually handicapped, statutory registration, psychological screening clinics, and closely regulated sterilisation in certain circumstances. These recommendations were included in the Mental Defectives Amendment Bill 1928, although the more controversial aspects were dropped following vehement parliamentary opposition. Gray subsequently stayed silent about his views on eugenics and the sterilisation of the mentally unfit, and on his chairmanship of the short-lived Eugenics Board.
Truby King had extolled Gray as an energetic optimist, strong, level-headed and undaunted by administrative challenges, but Gray's administration was firmly centralist. His keen eye for detail during institutional inspections could be discomforting for staff. Budgetary constraints persistently subjected institutions to severe overcrowding and staff shortages. Such difficulties might have stimulated innovation by others, but not Gray. Medical teaching of psychiatry remained practical, and Gray opposed establishing a university chair which might attract an outsider full of 'high falutin' theories'. After-care associations, like that patronised by Gray at Wellington, were primarily adjuncts to departmental programmes.
In his autobiography, The very error of the moon (1959), Gray disparaged New Zealand's older mental hospitals as a series of barracks-like buildings. In claiming that there had been no enthusiasm for the villa system, he overlooked hospitals he had worked in and the adoption of the system in principle by 1912. He constantly gave the villa system precedence over the development of psychiatric services in general hospitals, although he facilitated easier access to mental hospital treatment by voluntary admissions and an alternative form of committal. Capital development during Gray's administration was almost always along villa lines. Gray helped to institute the state registration of psychiatric nurses and the use of occupational therapy in mental hospitals.
Gray was clinically conservative with a philosophy founded upon the benefits of fresh air, sunshine, regular habits, suitable diet, exercise, recreation, rest and sleep. Sedatives to him meant 'doping'. Psychotherapy was the shibboleth of 'armchair psychologists' and 'wiseacre professors'. Gray opposed the introduction of electroconvulsive therapy in 1943, then claimed credit for the encouraging results.
Deteriorating living conditions in mental hospitals prompted public criticism, and industrial unrest in 1946 sparked an administrative review. In a frank encounter with his industrial adversaries before the prime minister, Gray apparently tendered his resignation. This took effect in January 1947 and paved the way for the amalgamation of the mental hospitals and health departments.
Gray was appointed a CMG in 1938, and honoured professionally. He was elected a fellow of the Royal Australasian College of Physicians (1946) and president of the New Zealand Branch of the British Medical Association (1947). He served, sometimes ex officio, on the Prisons Board and subsequent Parole Board (1929–57), Nurses and Midwives Registration Board (1945–47) and the Medical Council (1948–56).
Theodore Gray was a physically imposing figure, 5 feet 11 inches tall and weighing, as a young man, almost 13 stone. He had a strong, robust personality, possessed great energy and was remembered by friends as kind and humane. Well into retirement he retained his interest in the welfare of individual patients through a private practice. He took a keen interest in the Plunket Society and played snooker and tennis. He died at Wellington on 8 September 1964, survived by his wife, three sons and three daughters.