The 36-year-old , who signed a two-year deal when arriving at Ewood Park from Fulham last summer, has agreed to depart following talks with Blackburn boss Gary Bowyer.
Murphy, who began his career at Crewe before joining Liverpool in a £3million move in 1997, made 35 appearances and scored two goals for Blackburn last season.
The former England international made over 200 appearances for Liverpool and moved on to Charlton, for £2.5million, in 2004 before Tottenham paid £2million to take him to White Hart Lane in 2006.
He joined Fulham for an undisclosed fee 12 months later and made over 200 appearances for the Cottagers before moving north to Blackburn last June.
Meanwhile, Blackburn defender Nuno Henrique has returned to Portugal in a season-long loan move with newly-promoted Futebol Clube de Arouca.
Henrique bought out his contract at Portuguese club Braga before joining Rovers last summer, but the 26-year-old centre-half has yet to appear for Blackburn.