How to factory reset a late 2015 iMac Retina 5K 27 inch when 'Erase' function is greyed out?

The "Erase All Contents and Settings" feature is only available on

• Apple-Silicon-based Macs
• Intel-based Macs that have a T2 security chip (Mac computers with the Apple T2 Security Chip)

It takes advantage of the fact that those Macs encrypt and decrypt the contents of their internal SSDs in real time. The "erase" largely consists of telling the T2 or Apple Silicon chip to forget current encryption keys in favor of new ones – which effectively turns existing data on the SSD into so much non-decodable hash.

Your iMac predates the introduction of the T2 security chip by several years, so if you want to erase your drive, you have to do it the old-fashioned way.

Go to > What to do before you sell, give away, trade in, or recycle your Mac - Apple Support

scroll down to "If you can’t use Erase All Content and Settings" and start there.

tip: the links in steps 6 & 7 have the erase and reinstall in Recovery Mode directions.

Are you doing this from recovery mode?

From recovery mode by selecting utilities, erase. Be sure you select the top volume and not one of the subsets.