Mr Gray was elected to the local seat in 2007 when he replaced the retiring Kim Beazley, and served as Special Minister of State and Resources Minister under the former Rudd and Gillard governments.
He also served as national secretary of the ALP from 1993 to 2000.
Mr Gray offered to resign from the Federal Opposition’s frontbench immediately, but said he would continue to serve in whatever capacity Opposition Leader Bill Shorten chose until the next election.
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READ NOWOn Wednesday morning Mr Gray told ABC radio he had spent time thinking about his father-in-law Peter Walsh, a former Hawke government minister who died in April last year, over Christmas and decided it was time for the “next generation” to serve the party.
“Before Christmas, I had a look at the ages of our MPs,” he said.
“Here was I at 57, looking at going around not for another term, but for another two. And I took serious stock of that over Christmas.
“The next election campaign will be tough for Labor and it needs the next generation coming through,” he said.
“It doesn’t need me staying there because I can stay there. It needs the next generation, it needs people with a 30 or a 40 in front of their age.
“It doesn’t need people who are looking at being in the Parliament through their 60s.”
Mr Gray holds the seat of Brand by 2.9 per cent, and faced a pre-selection challenge from a 28-year-old fly-in fly-out Electrical Trades Union member for the local seat in November.
He is the third WA MP to declare they will not contest their seat at this year’s election, following earlier announcements by Alannah MacTiernan and Melissa Parke.