• During the 12th and 13th centuries, law was taught in the City of London, primarily by the clergy. During the 13th century, two events happened that destroyed this form of legal education; firstly, a decree by Henry III of England on 2 December 1234 that no institutes of legal education could exist in the City of London, and secondly a papal bull that prohibited the clergy from teaching the common law, rather than canon law. As a result the existing system of legal education fell apart. The common lawyers migrated to the hamlet of Holborn, the nearest place to the law courts at Westminster Hall that was outside the City.

The early records of all four Inns of Court have been lost, and it is not known precisely when each was founded. The records of Gray's Inn itself are lost up until 1569, and the precise date of founding cannot therefore be verified. The early records of all four Inns of Court have been lost, and it is not known precisely when each was founded. The records of Gray's Inn itself are lost up until 1569, and the precise date of founding cannot therefore be verified.

During the reign of Elizabeth I, Gray's Inn rose in prominence, and that period is considered the "golden age" of the Inn, with Elizabeth serving as the Patron Lady. This can be traced to the actions of Nicholas Bacon, William Cecil and Gilbert Gerard, all prominent members of the Inn and confidantes of Elizabeth.Cecil and Bacon in particular took pains to find the most promising young men and get them to join the Inn. In 1574 it was the largest of all the Inns of Court by number, with 120 barristers, and by 1619 it had a membership of more than 200 barristers. Gray's Inn, as well as the other Inns of Court, became noted for the parties and festivals it hosted. Students performed masques and plays in court weddings, in front of Queen Elizabeth herself, and hosted regular festivals and banquets at Candlemas, All Hallows Eve and Easter. At Christmas the students ruled the Inn for the day, appointing a Lord of Misrule called the Prince of Purpoole, and organising a masque entirely on their own, with the Benchers and other senior members away for the holiday. The Gray's Inn masque in 1588 with its centrepiece, The Misfortunes of Arthur by Thomas Hughes, is considered by A.W. Ward be the most impressive masque thrown at any of the Inns. William Shakespeare performed at the Inn at least once, as his patron, Lord Southampton, was a member.

The Inn is located at the intersection of High Holborn and Gray's Inn Road. It started as a single manor house with a hall and chapel, although an additional wing had been added by 1591, when the first point of reference (a map drawn by Ralph Agas) was created. Expansion continued over the next few decades, and by 1586 the Pension had added another two wings around the central court. Around these were several sets of chambers erected by members of the Inn under a leasehold agreement whereby ownership of the buildings would revert to the Inn at the end of the lease. As the Inn grew it became necessary (for safety purposes) to wall off the land owned by the Inn, which had previously been open to everyone. In 1591 the "back field" was walled off, but little more was done until 1608, when under the supervision of Francis Bacon, the Treasurer, more construction work was undertaken, particularly in walling off and improving the gardens and walks. In 1629 it was ordered that an architect supervise any construction and ensure that the new buildings were architecturally similar to the old ones, and the strict enforcement of this rule during the 18th century is given as a reason for the uniformity of the buildings at Gray's Inn.