Gray's re-signing has seen off the possibility of the 22-year-old making a return to Victoria.
Peter Rohde said the club was delighted to secure Gray's services for the next two years.
"It's great news for the club and for Robbie," Rohde said.
"He's an important part of our playing group and we certainly see him as a key player in our long-term future.
"His development has continued each year and he's now a vital cog in the starting line-up, rotating through the midfield and forward line."
Port Adelaide is hopeful Gray’s decision to stay at Alberton will help the club secure a second big-name signature, that of gun midfielder Travis Boak.
Boak, who shares a house with Gray, is being courted by several clubs in his native Victoria and has put off contract negotiations until at least mid-season.
Gray has emerged as one of the Power’s most promising young prospects over the past 18 months.
Last year he finished equal fourth in the club’s best and fairest and also took out the award for most improved player.
He booted five goals in a Showdown Medal-winning performance against Adelaide in round six and is ranked third in Port Adelaide’s goalkicking (10 goals), despite missing the first three games of the season through injury.
"Robbie is a real important player for us going forward,” coach Mark Williams said on Friday.
“His body is improving each year, so we are really confident that he can be a 10- to 12-year player for us. He started in the forward line and now we are really confident he is going to be a major player through the centre square and in the forward line.”
Boak has also enjoyed a good start to the season, despite attracting more attention from opposition players.
The skilful 21-year-old is considered future captaincy material at Port Adelaide and Williams said he was confident Boak would follow in Gray’s footsteps and re-sign with the club.
“Robbie has great connections with Boaky so if you get one, you will probably get the other,” Williams said.
"They are very comfortable with the understanding and development they are getting at Port Adelaide. Trav will still make his own decisions. He's his own man but he and Robbie are very good friends.”
