The family went to the Bathurst district and settled down. James married a local girl, Anne Malcolm, daughter of Joseph Malcolm and Mary Gleeson. They had four children, all born at Campbell's River: James b.1865, Abbey Elizabeth and Mary b.1867 and d.1867, Mary b.1868.
Around 1868, James left his wife and spent several years rambling around NSW. By the late 1870s he was a butcher in the remote western town of Gongolgon (between Brewarrina and Bourke). There he met Prudence Whye (nee Reed), a widow with 5 children. In March 1878 her son, Joseph, died and four months later her daughter, Kate, also died. Prudence was expecting James' child but they could not marry until after James obtained a divorce from Anne.
James and Prudence had a son, Daniel Reed Murphy, on 14 May 1879 and they married four days later.
Their second son was born on 27 December in the following year and named George Charles Reed Murphy. Around this time James built and became the licensee of the "Family Hotel" in Bourke while retaining his interest in Prudence's hotel at Gongolgon.
Further tragedy struck on Christmas Eve 1881 when the couple's first son, Daniel, died.
During the next five years, three girls were added to the family: Nora Lillian Murphy b.1882, Mary Ethel b.1884 and Lila Kate Murphy b.1886. James extended his business interests to dealings in stock and he owned significant parcels of land in and around Gongolgon, Bourke and Louth. He joined the Order of Oddfellows, Manchester Unity and took an interest in politics as a free trade advocate.
James Murphy died on 23 July 1914 at Bourke.