The team was formed in 1912 by Cumberland Posey, and remained in continuous operation for 38 seasons. The team was originally based in Homestead, Pennsylvania, adjacent to Pittsburgh. By the 1920s, with increasing popularity in the Pittsburgh region, the team retained the name "Homestead" but crossed the Monongahela River to play all home games in Pittsburgh, at the Pittsburgh Pirates' home Forbes Field and the Pittsburgh Crawfords' home Greenlee Field.
From 1940 until 1942, the Grays played half of their home games in Washington, D.C., while remaining in Pittsburgh for all other home stands. As attendance at their games in the nation's capital grew, by 1943, the Grays were playing more than two-thirds of their home games in Washington
The Grays grew out of an earlier industrial team. In 1900, a group of African-American players had joined together to form the Germantown Blue Ribbons, an industrial league team. For ten years, the Blue Ribbons fielded a team every season and played some of the best sandlot teams in the area. In 1910, the managers of the team retired. The players reorganized the team and named themselves the Murdock Grays. In 1912, they became the Homestead Grays, the name they retained for the remainder of the franchise's history.