Peter U. Murphey was born in North Carolina. Appointed from that state as a U.S. Navy Midshipman in 1834, he was promoted to the rank of Lieutenant in 1846. Murphey resigned from the U.S. Navy in April 1861 and became a Confederate States Navy officer in June of that year. In the rank of First Lieutenant, he served in Virginia and North Carolina waters in 1861-62, then was assigned to the Mobile Squadron. He commanded the gunboat CSS Morgan on Mobile Bay, Alabama, in 1862, and the gunboat CSS Selma in 1862-64. Wounded when his ship was captured in the Battle of Mobile Bay on 5 August 1864, First Lieutenant Murphy was a prisoner of war until he was exchanged in October. In May 1865, at the end of the Civil War, he surrendered to Federal authorities and was paroled shortly thereafter.