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In 1836, during the Cherokee removal known as the Trail of Tears, the United States army built Fort Butler in what is today Murphy. Fort Butler acted as the main collection point for Cherokee east of the mountains. From Fort Butler the Cherokee were taken over the mountains on the Unicoi Turnpike to the main internment camps at Fort Cass (today Charleston, Tennessee). Today the Unicoi Turnpike is known as Joe Brown Highway. The Cherokee County Historical Museum located in Murphy provides information about the Trail of Tears.

Murphy was once the terminus of the Murphy Branch rail line built in the late 19th century, although the branch no longer reaches Murphy.

Murphy was also the home of the once well-known crafts manufacturer Margaret Studios, which operated a nationwide chain of gift stores for its woodcraft products and housewares, such as lazy susans and gift trays.

Murphy is a town in Cherokee County, North Carolina, United States. The population was 1,568 at the 2000 census. Murphy is the county seat of Cherokee County and is the westernmost county seat in North Carolina. It is closer to the capitals of six other states (Georgia, Alabama, Tennessee, South Carolina, Kentucky, and West Virginia) than to Raleigh, the capital of North Carolina. Murphy was named for North Carolina politician Archibald Murphey.