Shares in the FTSE 100 fashion label were up 1.3 per cent just after lunchtime after Burberry confirmed a Sky News report revealing the appointment.
Murphy will replace Sir John Peace, who took Burberry onto the stock market as chairman in 2002. He announced that he would step down last year.
His replacement will be the latest change in a massive shakeup at the top of Burberry after new chief executive Marco Gobbetti joined last year, and later appointed designer Riccardo Tisci to lead the creative side.
“I am honoured to take up this role and to succeed Sir John as chairman," commented Murphy. "Burberry is a unique British brand that I have admired for a long time and I am looking forward to working with Marco Gobbetti and the board to guide the company through its next phase of growth.”
The change in leadership will start on 17 May when Murphy joins the company as chairman designate, and the full succession will take place at a shareholder meeting in July.
Gobbetti has already outlined transformation plans which will push the designer brand even further upmarket, a move which has raised some eyebrows in the City given Mulberry's unsuccessful push into premium a few years ago.
Earlier this week analysts at Jefferies said they had not yet seen evidence of product elevation and slammed the latest bag collection as "underwhelming".
Murphy was head of B&Q owner Kingfisher for five years between 2003 and 2008. He has also been CEO of sandwich-maker Greencore, and currently serves as chairman of both Tate & Lyle and Blackstone.