The 19-year-old son of former manager Eddie has struggled with injury but a late run of good form in the reserves has convinced Kevin Blackwell to extend his stay at Leeds.
"Nick has been unlucky with injuries in the last 18 months and we feel it is only right to give him the chance to show what he can do now he is fit again," Blackwell told Leeds' official website.
"He has a fitness training schedule to follow in the summer and hopefully he will then have the chance to prove himself."
Gray has been told he will be rewarded with a longer-term deal if he continues to improve.