Murphy developed around a railhead of the Boise, Nampa and Owyhee Railroad, built in 1899 by Colonel William H. Dewey.

Dewey had planned to extend the railroad to Silver City, but when mining operations in the Owyhee Mountains became unproductive, the line was not continued past Murphy.

The error in the Idaho Code, discovered by county prosecutor G. Edward Yarbrough, was finally corrected by Senate Bill 1009.

[7] The community likely was named after Cornelius "Con" Murphy, a crew boss with the Boise, Nampa and Owyhee Railroad and foreman during construction of the Guffey Bridge in 1897.

[5] Another source for the name may have been Pat Murphy, a Silver City mining engineer and friend of railroad owner Dewey.