C#

unsafe Bitmap ToGrayScale(Bitmap bmp)
{
    Bitmap grayBmp = new Bitmap(bmp.Width, bmp.Height, PixelFormat.Format8bppIndexed);

    // Prepare the palette
    ColorPalette pal = grayBmp.Palette;
    for (int i = 0; i < 256; i++)
        pal.Entries[i] = Color.FromArgb(i, i, i);

    grayBmp.Palette = pal;

    // Get BitmapData
    BitmapData bd = grayBmp.LockBits(
        new Rectangle(0, 0, bmp.Width, bmp.Height),
        ImageLockMode.ReadWrite,
        PixelFormat.Format8bppIndexed);

    byte* ptr = (byte*)bd.Scan0.ToPointer();

    for (int i = 0; i < bmp.Width; i++)
    {
        for (int j = 0; j < bmp.Height; j++)
        {
            Color c = bmp.GetPixel(i, j);

            // Offset must be Y*Stride + X*BytesPerPixel. In this case,
            // BytesPerPixel is 1
            ptr[j * bd.Stride + i] = (byte)((c.R + c.G + c.B) / 3);
        }
    }

    // Unlock
    grayBmp.UnlockBits(bd);

    return grayBmp;
}