diff --git a/doc/api/index.rst b/doc/api/index.rst
index d410ef035c3..e6b45603910 100644
--- a/doc/api/index.rst
+++ b/doc/api/index.rst
@@ -44,6 +44,7 @@ Color palette table generation:
 .. autosummary::
     :toctree: generated
 
+    grd2cpt
     makecpt
 
 Saving and displaying the figure:
diff --git a/pygmt/__init__.py b/pygmt/__init__.py
index f22df6dff7d..b7a6aa6007f 100644
--- a/pygmt/__init__.py
+++ b/pygmt/__init__.py
@@ -19,6 +19,7 @@
 from pygmt.session_management import end as _end
 from pygmt.src import (
     blockmedian,
+    grd2cpt,
     grdcut,
     grdfilter,
     grdinfo,
diff --git a/pygmt/src/__init__.py b/pygmt/src/__init__.py
index 132cb80cece..016e610d6de 100644
--- a/pygmt/src/__init__.py
+++ b/pygmt/src/__init__.py
@@ -7,6 +7,7 @@
 from pygmt.src.coast import coast
 from pygmt.src.colorbar import colorbar
 from pygmt.src.contour import contour
+from pygmt.src.grd2cpt import grd2cpt
 from pygmt.src.grdcontour import grdcontour
 from pygmt.src.grdcut import grdcut
 from pygmt.src.grdfilter import grdfilter
diff --git a/pygmt/src/grd2cpt.py b/pygmt/src/grd2cpt.py
new file mode 100644
index 00000000000..569a3232060
--- /dev/null
+++ b/pygmt/src/grd2cpt.py
@@ -0,0 +1,190 @@
+"""
+grd2cpt - Create a CPT from a grid file.
+"""
+
+from pygmt.clib import Session
+from pygmt.exceptions import GMTInvalidInput
+from pygmt.helpers import (
+    build_arg_string,
+    data_kind,
+    dummy_context,
+    fmt_docstring,
+    kwargs_to_strings,
+    use_alias,
+)
+
+
+@fmt_docstring
+@use_alias(
+    A="transparency",
+    C="cmap",
+    D="background",
+    F="color_model",
+    E="nlevels",
+    G="truncate",
+    H="output",
+    I="reverse",
+    L="limit",
+    M="overrule_bg",
+    N="no_bg",
+    Q="log",
+    R="region",
+    T="series",
+    V="verbose",
+    W="categorical",
+    Ww="cyclic",
+    Z="continuous",
+)
+@kwargs_to_strings(G="sequence", L="sequence", R="sequence", T="sequence")
+def grd2cpt(grid, **kwargs):
+    r"""
+    Make GMT color palette tables from a grid file.
+
+    This is a module that will help you make static color palette tables
+    (CPTs). By default, the CPT will simply be saved to the current session,
+    but you can use ``output`` to save it to a file. The CPT is based on an
+    existing dynamic master CPT of your choice, and the mapping from data value
+    to colors is through the data's cumulative distribution function (CDF), so
+    that the colors are histogram equalized. Thus if the grid(s) and the
+    resulting CPT are used in :meth:`pygmt.Figure.grdimage` with a linear
+    projection, the colors will be uniformly distributed in area on the plot.
+    Let z be the data values in the grid. Define CDF(Z) = (# of z < Z) / (# of
+    z in grid). (NaNs are ignored). These z-values are then normalized to the
+    master CPT and colors are sampled at the desired intervals.
+
+    The CPT includes three additional colors beyond the range of z-values.
+    These are the background color (B) assigned to values lower than the lowest
+    *z*-value, the foreground color (F) assigned to values higher than the
+    highest *z*-value, and the NaN color (N) painted wherever values are
+    undefined. For color tables beyond the standard GMT offerings, visit
+    `cpt-city <http://soliton.vm.bytemark.co.uk/pub/cpt-city/>`_ and
+    `Scientific Colour-Maps <http://www.fabiocrameri.ch/colourmaps.php>`_.
+
+    If the master CPT includes B, F, and N entries, these will be copied into
+    the new master file. If not, the parameters :gmt-term:`COLOR_BACKGROUND`,
+    :gmt-term:`COLOR_FOREGROUND`, and :gmt-term:`COLOR_NAN` from the
+    :gmt-docs:`gmt.conf <gmt.conf>` file or the command line will be used. This
+    default behavior can be overruled using the options ``background``,
+    ``overrule_bg`` or ``no_bg``.
+
+    The color model (RGB, HSV or CMYK) of the palette created by
+    :meth:`pygmt.grd2cpt` will be the same as specified in the header of the
+    master CPT. When there is no :gmt-term:`COLOR_MODEL` entry in the master
+    CPT, the :gmt-term:`COLOR_MODEL` specified in the
+    :gmt-docs:`gmt.conf <gmt.conf>` file or the ``color_model`` option will be
+    used.
+
+    Full option list at :gmt-docs:`grd2cpt.html`
+
+    {aliases}
+
+    Parameters
+    ----------
+    grid : str or xarray.DataArray
+        The file name of the input grid or the grid loaded as a DataArray.
+    transparency : int or float or str
+        Sets a constant level of transparency (0-100) for all color slices.
+        Append **+a** to also affect the fore-, back-, and nan-colors
+        [Default is no transparency, i.e., 0 (opaque)].
+    cmap : str
+        Selects the master color palette table (CPT) to use in the
+        interpolation. Full list of built-in color palette tables can be found
+        at :gmt-docs:`cookbook/cpts.html#built-in-color-palette-tables-cpt`.
+    background : bool or str
+        Select the back- and foreground colors to match the colors for lowest
+        and highest *z*-values in the output CPT [Default (``background=True``
+        or ``background='o'``) uses the colors specified in the master file, or
+        those defined by the parameters :gmt-term:`COLOR_BACKGROUND`,
+        :gmt-term:`COLOR_FOREGROUND`, and :gmt-term:`COLOR_NAN`]. Use
+        ``background='i'`` to match the colors for the lowest and highest
+        values in the input (instead of the output) CPT.
+    color_model :
+        [**R**\|\ **r**\|\ **h**\|\ **c**][**+c**\ [*label*]].
+        Force output CPT to be written with r/g/b codes, gray-scale values or
+        color name (**R**, default) or r/g/b codes only (**r**), or h-s-v codes
+        (**h**), or c/m/y/k codes (**c**).  Optionally or alternatively, append
+        **+c** to write discrete palettes in categorical format. If *label* is
+        appended then we create labels for each category to be used when the
+        CPT is plotted. The *label* may be a comma-separated list of category
+        names (you can skip a category by not giving a name), or give
+        *start*\[-], where we automatically build monotonically increasing
+        labels from *start* (a single letter or an integer). Append ``-`` to
+        build ranges *start*-*start+1* instead.
+    nlevels : bool or int or str
+        Set to ``True`` to create a linear color table by using the grid
+        z-range as the new limits in the CPT. Alternatively, set *nlevels*
+        to resample the color table into *nlevels* equidistant slices.
+    series : list or str
+        [*min/max/inc*\ [**+b**\|\ **l**\|\ **n**\]|\ *file*\|\ *list*\].
+        Defines the range of the new CPT by giving the lowest and highest
+        z-value (and optionally an interval). If this is not given, the
+        existing range in the master CPT will be used intact. The values
+        produced defines the color slice boundaries.  If **+n** is used it
+        refers to the number of such boundaries and not the number of slices.
+        For details on array creation, see
+        :gmt-docs:`makecpt.html#generate-1d-array`.
+    truncate : list or str
+        *zlo/zhi*.
+        Truncate the incoming CPT so that the lowest and highest z-levels are
+        to *zlo* and *zhi*. If one of these equal NaN then we leave that end of
+        the CPT alone. The truncation takes place before any resampling. See
+        also :gmt-docs:`cookbook/features.html#manipulating-cpts`.
+    output : str
+        Optional argument to set the file name with extension .cpt to store
+        the generated CPT file. If not given or False (default), saves the CPT
+        as the session current CPT.
+    reverse : str
+        Set this to True or c [Default] to reverse the sense of color
+        progression in the master CPT. Set this to z to reverse the sign of
+        z-values in the color table. Note that this change of z-direction
+        happens before *truncate* and *series* values are used so the latter
+        must be compatible with the changed *z*-range. See also
+        :gmt-docs:`cookbook/features.html#manipulating-cpts`.
+    overrule_bg : str
+        Overrule background, foreground, and NaN colors specified in the master
+        CPT with the values of the parameters :gmt-term:`COLOR_BACKGROUND`,
+        :gmt-term:`COLOR_FOREGROUND`, and :gmt-term:`COLOR_NAN` specified in
+        the :gmt-docs:`gmt.conf <gmt.conf>` file or on the command line. When
+        combined with ``background``, only :gmt-term:`COLOR_NAN` is considered.
+    no_bg : bool
+        Do not write out the background, foreground, and NaN-color fields
+        [Default will write them, i.e. ``no_bg=False``].
+    log : bool
+        For logarithmic interpolation scheme with input given as logarithms.
+        Expects input z-values provided via ``series`` to be log10(*z*),
+        assigns colors, and writes out *z*.
+    continuous : bool
+        Force a continuous CPT when building from a list of colors and a list
+        of z-values [Default is None, i.e. discrete values].
+    categorical : bool
+        Do not interpolate the input color table but pick the output colors
+        starting at the beginning of the color table, until colors for all
+        intervals are assigned. This is particularly useful in combination with
+        a categorical color table, like ``cmap='categorical'``.
+    cyclic : bool
+        Produce a wrapped (cyclic) color table that endlessly repeats its
+        range. Note that ``cyclic=True`` cannot be set together with
+        ``categorical=True``.
+    {V}
+    """
+    if "W" in kwargs and "Ww" in kwargs:
+        raise GMTInvalidInput("Set only categorical or cyclic to True, not both.")
+    kind = data_kind(grid)
+    with Session() as lib:
+        if kind == "file":
+            file_context = dummy_context(grid)
+        elif kind == "grid":
+            file_context = lib.virtualfile_from_grid(grid)
+        else:
+            raise GMTInvalidInput(f"Unrecognized data type: {type(grid)}")
+        with file_context as infile:
+            if "H" not in kwargs.keys():  # if no output is set
+                arg_str = " ".join([infile, build_arg_string(kwargs)])
+            elif "H" in kwargs.keys():  # if output is set
+                outfile = kwargs.pop("H")
+                if not outfile or not isinstance(outfile, str):
+                    raise GMTInvalidInput("'output' should be a proper file name.")
+                arg_str = " ".join(
+                    [infile, build_arg_string(kwargs), f"-H > {outfile}"]
+                )
+            lib.call_module("grd2cpt", arg_str)
diff --git a/pygmt/src/makecpt.py b/pygmt/src/makecpt.py
index e4c9f7190a0..bdad3f07952 100644
--- a/pygmt/src/makecpt.py
+++ b/pygmt/src/makecpt.py
@@ -118,7 +118,7 @@ def makecpt(**kwargs):
         happens before *truncate* and *series* values are used so the latter
         must be compatible with the changed *z*-range. See also
         :gmt-docs:`cookbook/features.html#manipulating-cpts`.
-    overrule_bg :
+    overrule_bg : str
         Overrule background, foreground, and NaN colors specified in the master
         CPT with the values of the parameters :gmt-term:`COLOR_BACKGROUND`,
         :gmt-term:`COLOR_FOREGROUND`, and :gmt-term:`COLOR_NAN` specified in
diff --git a/pygmt/tests/test_grd2cpt.py b/pygmt/tests/test_grd2cpt.py
new file mode 100644
index 00000000000..26a83cced36
--- /dev/null
+++ b/pygmt/tests/test_grd2cpt.py
@@ -0,0 +1,79 @@
+"""
+Tests for grd2cpt.
+"""
+import os
+
+import pytest
+from pygmt import Figure
+from pygmt.datasets import load_earth_relief
+from pygmt.exceptions import GMTInvalidInput
+from pygmt.helpers import GMTTempFile
+from pygmt.helpers.testing import check_figures_equal
+from pygmt.src.grd2cpt import grd2cpt
+
+
+@pytest.fixture(scope="module", name="grid")
+def fixture_grid():
+    """
+    Load the grid data from the sample earth_relief file.
+    """
+    return load_earth_relief()
+
+
+@check_figures_equal()
+def test_grd2cpt(grid):
+    """
+    Test creating a CPT with grd2cpt to create a CPT based off a grid input and
+    plot it with a color bar.
+    """
+    fig_ref, fig_test = Figure(), Figure()
+    # Use single-character arguments for the reference image
+    fig_ref.basemap(B="a", J="W0/15c", R="d")
+    grd2cpt(grid="@earth_relief_01d")
+    fig_ref.colorbar(B="a2000")
+    fig_test.basemap(frame="a", projection="W0/15c", region="d")
+    grd2cpt(grid=grid)
+    fig_test.colorbar(frame="a2000")
+    return fig_ref, fig_test
+
+
+def test_grd2cpt_blank_output(grid):
+    """
+    Use incorrect setting by passing in blank file name to output parameter.
+    """
+    with pytest.raises(GMTInvalidInput):
+        grd2cpt(grid=grid, output="")
+
+
+def test_grd2cpt_invalid_output(grid):
+    """
+    Use incorrect setting by passing in invalid type to output parameter.
+    """
+    with pytest.raises(GMTInvalidInput):
+        grd2cpt(grid=grid, output=["some.cpt"])
+
+
+def test_grd2cpt_output_to_cpt_file(grid):
+    """
+    Save the generated static color palette table to a .cpt file.
+    """
+    with GMTTempFile(suffix=".cpt") as cptfile:
+        grd2cpt(grid=grid, output=cptfile.name)
+        assert os.path.getsize(cptfile.name) > 0
+
+
+def test_grd2cpt_unrecognized_data_type():
+    """
+    Test that an error will be raised if an invalid data type is passed to
+    grid.
+    """
+    with pytest.raises(GMTInvalidInput):
+        grd2cpt(grid=0)
+
+
+def test_grd2cpt_categorical_and_cyclic(grid):
+    """
+    Use incorrect setting by setting both categorical and cyclic to True.
+    """
+    with pytest.raises(GMTInvalidInput):
+        grd2cpt(grid=grid, cmap="batlow", categorical=True, cyclic=True)