After leaving Bowling Green, he won the 1983–84 Adams Cup championship as a member of the Tulsa Oilers of the Central Hockey League (CHL), which coached by Tom Webster.

With McPhee, the team made the playoffs four times, won a division championship, and played in the 1994 Stanley Cup Finals, which they lost to the New York Rangers.

In a "fire sale", the Capitals traded Sergei Gonchar, Jaromír Jágr, Peter Bondra, Michael Nylander, Mike Grier, Robert Lang and captain Steve Konowalchuk that season.

McPhee's trade deadline acquisitions of veterans Sergei Fedorov, Matt Cooke and Cristobal Huet all played large roles in leading the Capitals to their third Southeast Division title.

[7] On September 23, 2015, it was formally announced that McPhee had joined the New York Islanders in the role of an alternate governor, vice president and special advisor to general manager Garth Snow.

[12] On July 13, 2016, McPhee left the Islanders organization after he was hired by Bill Foley, owner of an NHL expansion franchise, which would later be named the Vegas Golden Knights, to be the new general manager of the team.

[15] McPhee resigned as Golden Knights general manager on September 1, 2019, in favor of Kelly McCrimmon, but continued to serve as president of hockey operations.