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Murphy was reared a Roman Catholic and was born in Ireland, the son of the headmaster of a private boys' school. He joined the Jesuits while pursuing his priestly studies. He left the Jesuits in his twenties after having a healing praying experience and moved to the United States, where he trained as a chemist in New York. (having a degree in chemistry by that time). In this location, he went to the Church of the Healing Christ, which is a division of the Church of Divine Science and where Emmet Fox was ordained in 1931.

He relocated to Los Angeles in the middle of the 1940s, where he encountered Ernest Holmes, the founder of Religious Science. In 1946, Holmes gave him an ordination into Religious Science, and he later began teaching at the Institute of Religious Science. An encounter with with Divine Science Association president Erwin Gregg led to him being reordained into Divine Science, and he became the minister of the Los Angeles Divine Science Church in 1949, which he built into one of the largest New Thought congregations in the country. In the next decade, Murphy married, earned a PhD in psychology from the University of Southern California and started writing. After his first wife died in 1976, he remarried to a fellow Divine Science minister who was his longstanding secretary. He died in 1981.