Graham's contract is at the centre of a huge dispute between his team and the NFL, with the player himself feeling that he deserves to be paid wide receiver wages - having lined up as one for over 60% of team snaps last season.
Sharpe, who played for the Denver Broncos and the Baltimore Ravens during a 14-year career, told NFL AM: "I think Jimmy Graham should be the highest-paid tight end. I think he should be the first tight end to make $10m a year, but at the end of the day, he is a tight end.
"Ebron can dress it up, say he's hybrid or whatever he wants to call it, but at the end of the day you go to the Pro Bowl as a tight end and if you are fortunate enough, if you play long enough and if your teams win enough games you'll go to the Hall of Fame as a tight end.
"Just because the running back, he lines up out wide and he catches a lot of passes, well, now what? Is he a wide receiver? No, he's a running back. Graham is a tight end. He just deserves good pay."
Graham has broken 1,000 receiving yards in two of his four NFL seasons, scoring over 40 touchdowns since his debut in 2010.