An 18-year-old winger, the deal with Liverpool is said to have been agreed between the two clubs as part of the loan-deal that saw Jordan Ibe spend time at St Andrews last season.
Despite the keen interest in the youngster, Gray is something of an unknown quantity outside of Birmingham, so here are five facts to get you in the know.
1) Born in Birmingham in 1996, 18-year-old Gray joined the Blues as an Under-11, progressing through the youth ranks before making his debut for the first-team in October 2013. As a boy he supported Manchester United - a fact likely to annoy a number of his future teammates
2) Predominately a left-winger, Gray can play anywhere along the front-line, and has described his strengths as “pace, dribbling and technique”, although he feels he needs "to score more goals” to become a success - a striking resemblance to current Reds star Raheem Sterling. Has named Nathan Redmond as the biggest influence upon his early career.
3) He has so far made 14 Championship appearances for Birmingham, totalling seven in each season since turning professional. He has scored one goal in each, but with his importance in the current Blues side, both his games and goals tally should be increasing as the current season progresses.
4) He made his England Under-18 debut in February 2014, going on to make three appearances at that age group, before an Under-19 call-up beckoned in September of the same year. Has so far won one cap at his current age level.