Rev Gregory Greiten was praised after making the personal omission at St Bernadette church in the US city of Milwaukee.
He also accused the Catholic Church of pretending gay priests "don't exist", while saying young people need celibate gay priests who can act as "authentic role models".
Writing in the National Catholic Reporter to coincide with his announcement, Rev Greiten explained: "By choosing to enforce silence, the institutional church pretends that gay priests and religious do not really exist.
"Because of this, there are no authentic role models of healthy, well-balanced, gay, celibate priests to be an example for those, young and old, who are struggling to come to terms with their sexual orientation.
"This only perpetuates the toxic shaming and systemic secrecy."
Rev Greiten, who acknowledge his sexuality at the age of 24, said only a "few courageous priests" have acknowledged a same-sex attraction and have "chosen to live in truth and authenticity".
The Catholic Archbishop of Milwaukee, Jerome Listecki was quoted by the USA Today Network as saying: "We support Father Greiten in his own, personal journey and telling his story of coming to understand and live with his sexual orientation.
"As the Church teaches, those with same-sex attraction must be treated with understanding and compassion.
"Greg's own story reminds each of us of God's call to continue to grow in understanding and to live holy, chaste lives."