Murphy grew up in an upper-middle-class family. His father owned Aqua Show, a water ballet arena on the grounds of the World's Fair in 1939 and 1964. During Murphy's childhood, the arena was the site of big-band concerts by such jazz musicians as Duke Ellington and Count Basie.

Acquiring his first guitar at the age of 12, Murphy quickly advanced on the instrument. Within a year, he was playing in his first band. In 1966, Murphy's band the Rapsillions placed first in a New York statewide Battle of the Bands.

Together with his brother Matthew, Murphy spent the late '60s in Europe, performing his original tunes in subway stations and street corners. He also had a bit role in Federico Fellini's 1972 film Roma. Returning to the United States in 1973, Murphy formed a band, Elliott Murphy's Aquashow. Performing frequently at New York hot spots, including Max's Kansas City and the Mercer Arts Center, Murphy and the group became associated with the art rock scene that included Patti Smith and the New York Dolls. Although their 1975 debut album, Aquashow, was critically acclaimed, it failed to break through commercially. Murphy's subsequent 1970s recordings -- Lost Generation, Night Lights, and Just a Story from America -- sold poorly. In 1980, Murphy launched his own record label, Courtesan, with a six-song EP, Affairs. The following year, he released a folk-rock album, Murph the Surf. Murphy's album Party Girls & Broken Poets, released in 1984, was nominated for a New York Music Award as Album of the Year.

Murphy has consistently worked with innovative producers. Milwaukee, released in 1986, was produced by Jerry Harrison of Talking Heads, while Change Will Come, released in 1987, was produced by James Ball of the Smithereens. A live album, Hot Point, released in 1989, featured lead guitar by Chris Spedding.

Despite the state-of-the-art sound of his albums, Murphy continued to encounter commercial resistance in the United States. In Europe, however, it was a much different scenario. Murphy's concerts were packed by enthusiastic audiences while his albums sold well. In 1990, Murphy emigrated to Paris, where he continues to live with his wife, Francoise, and his son, Gaspard.

Shortly after moving to Paris, Murphy released a 24-song album, 12, that was shortened and rechristened Unreal City upon release in the United States. In 1995, Murphy assembled a new band that featured drummer Andy Newmark (Roxy Music, Eric Clapton), acoustic and electric bassist Cuch Merchan (Eurythmics), and percussionist Luis Jardim (Rolling Stones). Recorded at ICP Studios in Brussels, Belgium, the album included a duet with Bruce Springsteen on Murphy's tune "Everything I Do (Leads Me Back to You)." In 1998, Murphy returned with the album Beauregard. Terre Commune was issued in 2001. Soul Surfing arrived in 2003, followed by the Never Say Never: The Best of 1995-2005 compilation in 2005. Murphy released Murphy Gets Muddy the following year, Coming Home Again in early 2007 and Notes from the Underground in 2008.

In addition to his career as a musician, Murphy has been active as a writer, penning the liner notes for the Velvet Underground's 1969 Live and the Violent Femmes' Add It Up (1981-1993). Murphy's articles have been published by Spin and Rolling Stone magazines, and have included feature stories on Tom Waits and Keith Richards. Murphy has also published a novel, Cold and Electric, and two collections of his short stories.