Rafferty can be seen playing the vintage white Fender Esquire guitar in the 1988 video for the song.
The guitar, made in 1954 and said to have previously belonged to ex-Beatle George Harrison, is expected to fetch up to £15,000 at Bonhams sale of entertainment memorabilia in London on Wednesday.
The guitar is one of four from Rafferty's personal collection put up for sale by the Paisley-born star's daughter, Martha. Other items to go under the hammer include gold and platinum discs, and awards from Rafferty's career.
ning four decades. They recognise iconic songs including Baker Street and the Steeler's Wheel classic Stuck in the Middle With You.
Fans all over the world, including America where Rafferty sold millions of records, are expected to bid after Martha announced the sale of the items "to clear space".
Stephen Maycock, Bonhams entertainment memorabilia specialist, said: "Gerry is an extremely well-known and well-loved artist who had fantastic success over a long period.
"One of the exciting aspects of this sale is that they have come directly from Gerry's personal collection. It's the perfect provenance for collectors as the object gives them a personal link back to the musician.
"There has been international interest, and we expect some excitement on the day."
He added: "Collectors can clearly see the Fender Esquire in the video for 'Shipyard Town'. Gerry also used this guitar on tour in the 80s.
"Apparently, when Gerry bought it from the guitar shop, Rare & Vintage Guitars, he was told it had previously belonged to George Harrison.
"It is a really early guitar by Fender, circa 1954, and a precursor to the Telecaster. It's an important guitar in its own right -- add the ownership of a famous musician like Gerry Rafferty and it is doubly attractive.
"The Fender Mustang bass guitar for sale was used on recordings in the 70s, and there are certificates for songs like Baker Street and Stuck in the Middle, which everyone knows.
"It's a very rare opportunity for fans to own something like this."
The items are expected to fetch more than £30,000 in total.
The highlight is Rafferty's Fender Esquire guitar, estimated to fetch £10,000-15,000.
The Baker Street singer's Gibson ES345TD guitar is expected to make £6000-7000, while a 1977/78 Fender Mustang bass guitar could make £1500-2000. Rafferty's Don Musser 12-string acoustic guitar is expected to sell for £2500-3000.
Other items for sale include a framed BMI special citation of achievement for more than 2 million broadcast performances of Stuck in the Middle With You, valued at £250-350.
A similar BMI Special Citation for more than 3 million broadcast performances of Right Down The Line, is also expected to fetch £250-350, while gold (50,000 copies) and platinum (100,000 copies) sales awards for the album 'City To City' could make £500-600.
A National Academy of Recording Arts and sciences (NARAS) Nomination Certificate for 'Baker Street', awarded to Rafferty in the category of Best Vocal Performance, Male Pop, Rock And Folk Field, 1978, is expected to fetch £300-400.
And an Ivor Novello Certificate of Nomination for 'Baker Street', awarded to Rafferty for the category of Outstanding British Lyric for the year 1978/79, could also make £300-400.
A Gold sales award for the album 'Night Owl', 1979, presented to Rafferty, to recognise sales of more than 100,000 copies in the UK, is estimated at £800-1200.
Martha, 42, originally announced items would be sold in a Facebook update last year, saying: "My Dad kept all his awards in the downstairs bathroom cupboard so time to let go of a few I think"
She added: "Time to clear a space so new things can happen…."
When it was originally thought she would part with the handwritten lyrics to Baker Street, family and fans encouraged her to reconsider.
Gerry's cousin Alan Rafferty asked her to keep the items in the family and pass them on to her own daughter Celia.
He said: "Very big decision Martha. The original hand written lyrics for Baker St? I don't think even Bonhams can put a price on those.
"If I was you Martha, I would laminate the Baker St lyrics, and line Celia's sock drawer with them. Your dad would get a kick out of that.
"Then when she is old enough she can see where it really all began. A sheet of A4 doesn't take up much space. I think you would end up hugely regretting parting with them x"
Music lover Mick McCarthy added: "It would be extremely foolish to sell the handwritten lyrics to Baker Street. Keep those in your family.
"They're priceless, both financially and historically. As important as anything from the Beatles. Lend them to a museum perhaps, but keep them for your family."
Colin Nimmo added: "I am sure we can get a museum in Glasgow / Paisley to help you sort through your mountain of memorabilia and get it displayed for his fans and the world. This deserves better than to be on some Millionaires wall."
Martha admitted: "Truth is there's simply too much, like the idea of a Paisley museum though. Will look into that."
In April, a unique exhibition showcasing Rafferty's life and work opened at Paisley Museum. It included many personal artefacts loaned by Martha, who helped curate the exhibition in her father's memory.
Bring it all Home: The Exhibition featured items from gold discs and guitars to hand-written lyrics to his biggest hits. It attracted interest from around the UK and abroad.
Rafferty, who died in 2011 aged 63, started out in folk group The Humblebums with Billy Connolly and formed Stealers Wheel with Joe Egan in 1972. His most famous hit, Baker Street, reached No3 in the UK and No2 in the US in 1978. It is best known for its saxophone solo.