Twenty-five-year-old Gray joined the Gulls on trial during pre-season and has found the net against Newton Abbot Spurs, Bristol City and Tiverton Town.
Gray spent most of his youth career with his home-town club, Middlesbrough.
He then moved on to Darlington, Kettering Town and Accrington Stanley.
Spells at Wrexham and Southport were followed by one with Northern Irish side Glenavon.
“I am delighted to have signed James,” player-manager Kevin Nicholson told the club`s official website. “He has shown a real grit and determination during pre-season to get his career back on track after a rough year. He deserves that chance and has shown that he is hard working, aggressive, and good in front of goal.
“His next task is to get himself in the team, but I can be sure that he will keep all of the strikers on their toes with his enthusiasm and work rate.
“If he keeps up his work ethic, he is the type of player that our fans will take to, and the kind of guy that will do well in our environment.
“He has earned his chance, and now I expect him to show us all even more of what he can do”.