The Raptors are expected to announce a trade Monday that will send the 27-year-old small forward along with centre Aaron Gray and forward Quincy Acy to the Sacramento Kings, according to multiple reports.
The Raptors will reportedly get guards John Salmons and Greivis Vasquez, forward Patrick Patterson and centre Chuck Hayes in return.
Gay is averaging 19.4 points per game, 7.4 rebounds and 2.2 assists for the Raptors this season.
The six-foot-eight, 230-pound Gay is the Raptors' highest paid player with a contract that pays him US$17.8 million this season with a $19.3-million player option for next season.
A first-round pick of the Houston Rockets in 2006, Gay came to Toronto from Memphis last January in a three-team deal that sent Ed Davis to the Grizzlies and Jose Calderon to Detroit.
Gray, a seven-foot, 270-pound 29-year-old bench player, is averaging 1.3 points and two assists. He's in the last year of a contract that pays him $2.6 million.
Acy, at 6-7, 225-pounds, is averaging 2.7 points and 2.1 rebounds off the bench. The 23-year-old is making just $788,872 with one year left on his contract after being drafted 37th overall by the Raptors in 2012.
All three players were pulled from the Raptors' lineup ahead of their Sunday night game against the Lakers in Los Angeles.
Salmons, a 33-year-old who brings a cap hit of $7.5 million to Toronto this season with $7 million more in 2014-15, is the most expensive player coming from the Kings. At 6-7, 210 pounds, Salmons averages 5.8 points per game and 2.4 assists.
The 30-year-old Hayes, a 6-6, 250 pounder, makes $5.7 million this season and $5.9 million next season. He averages 2.1 points and 2.9 rebounds.
Patterson and Vasquez are both expiring contracts.
Patterson, a 6-9, 235-pound 24-year-old, makes $3.1 million this season while averaging 6.9 points and 5.8 rebounds.
The 26-year-old Vasquez brings a cap hit of $2.1 million. At 6-6, 211 pounds, Vasquez is averaging 9.8 points and 5.3 assists.