The chain was founded in 1906 in the Pittsburgh suburb of McKeesport, Pennsylvania, by George Clinton Murphy.

[4][2] Murphy's expanded cautiously during the 1920s, letting it cope with the Great Depression better than other retailing chains:[3]: 47  Sales in 1930 were reported to have risen about 9% ($17 million).

The lunch counters in the stores were a popular destination for quick and inexpensive meals (prior to the rise of fast food).

Murphy's stores were designed in house and to a high standard, led by architects like Harold Ellsworth Crosby.

[6] In 1970, it opened its first large scale store, branded as "Murphy's Mart" in Pittsburgh, Pennsylvania.

In 1989, Ames sold the G. C. Murphy and Bargain World divisions to E-II Holdings, parent of McCrory's, in order to help offset debt incurred during their recent acquisition of Zayre.

[11] That history, titled For the Love of Murphy's: The Behind-the-Counter Story of a Great American Retailer, by Jason Togyer, was published in 2008 by Pennsylvania State University Press.