James Constable and Jack Midson both hit doubles as United recorded their biggest win of the season.
Constable bagged his tenth and 11th goals of the season before leaving the pitch with an injury - all in the first half.
And his replacement, Midson, followed suit in the second half to put table-topping Oxford nine points clear at the top of the table.
The U's leading scorer struck in the ninth and 24th minutes, and Jamie Cook added a third before the break after some very unselfish play from the talismanic centre forward.
United were unchanged from the team that drew at Barrow, though Billy Turley was unable to take up his place on the bench because of a thigh strain, which meant there was no keeper among the substitutes for the first time since the opening day match against York.
Grays, in a distinctive all-white strip, had plenty of possession in the early minutes as they started brightly.
But it didn't take Oxford long to get into gear and get their passing game going.
And Constable immediately demonstrated his sharpness by bursting past a defender and cutting in from the left.
Jamie Cook continued the attack with a classy cross, and it needed some desperate defending to clear it for a corner.
But in the ninth minute, when the U's won a free-kick for handball, and Cook delivered it beautifully from the right, Constable escaped his marker to head down and into the goal from close range to open the scoring - his tenth goal of the season.
There was an extreme confidence, almost arrogance, about the way the home side knocked the ball about.
After a series of intricate short passes, and some good movement off the ball, they worked themselves into a good position for Matt Green to fire over a dangerous right-wing cross that Anwar Uddin nodded for a corner, though it wasn't that far away from being an own goal.
Oxford looked dangerous every time they attacked, which was partly due to their own play, and partly because Grays were so poor at the back.
Goalkeeper Preston Edwards made a complete mess of a simple catch when Green outjumped him to a high ball knocked forward by Cook in the 28th minute, and the ball dropped for Constable, who had the easiest task imaginable in walking the ball into an unguarded goal.
Edwards, probably wishing he had tried to punch clear rather than catch, protested so strongly to the ref that he had been fouled that he was booked, but there didn't look to have been a foul.
Constable almost completed his hat-trick when Green headed down, Cook just failed to reach the ball, and heprepared to pull the trigger with his right foot. Only this time Uddin's challenge did enough to put him off and he shot wide.
But it did become 3-0 two minutes before the break. Constable charged his way through the inside left channel, and though he had an opportunity to go for his hat-trick himself, he unselfishly squared it for Cook to sidefoot home.
Moments later he signalled to the bench, and was replaced by Jack Midson, which was hardly what Grays wanted to see.
The visitors had a bit more of a go in the second half, with Jamie Slabber coming on at half-time, and Icelandic player Petar Rnkovic soon after.
Ryan Clarke was forced into action to save shots from Daryl Robson and Slabber, while Luke Foster's excellent block prevented a goal after a rare mistake from Mark Creighton, allowing Rnkovic to get around him.
Midson and Adam Murray both showed great sill at times, and after one classy move involving Adam Chapman, Midson and Simon Clist, Green saw his low drive saved.
But a fourth goal was always on the cards, and it came in the 73rd minute.
A corner was cleared only as far as Chapman, outside the area, and he drove the ball back in to the left post, where Midson swivelled to sidefoot in.
Quite why the Grays defence had not pushed out to trap him offside, only they will know.
In the last minute, Midson ran through on goal, was brought down by Edwards as he tried to go around him, and the ref pointed for a penalty, and showed a second yellow to the keeper, which meant a red.
With no keeper on the bench, Uddin went in goal, but Midson had little trouble in beating him from the spot, to make it 5-0.
Oxford Utd: Clarke, Chapman, Foster, Creighton, Kinniburgh, Bulman, Murray (Woodley 78), Clist, Green (Batt 66), Constable (Midson 44), Cook. Subs not used: Sandwith, Day. Booked: none.
Referee: Rob Merchant (Staffordshire).
Att: 6,150 (52 from Grays)
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