The 32-year-old had been closely linked with a move to Middlesbrough this summer.
The forward had a phenomenal season in the Championship last year, scoring 27 goals in 48 games as Ipswich made the playoffs, causing the likes of Middlesbrough, Sheffield Wednesday and Stoke to be linked with the former Celtic and Sunderland man, according to Sky, the Mail and the Stoke Sentinel respectively.
Middlesbrough had looked the side most eager to recruit him, with the need for attacking additions clear given the departure of loan duo Patrick Bamford and Jelle Vossen from last season's playing staff.
Boro have just Kike to call on as a senior striker at present, and Aitor Karanka would surely be identifying the attacking areas as the major part of the side that needs strengthening before the season begins.
Sky Sports reported last week that the club had entered into negotiations with the Republic of Ireland international after making a £4 million bid for the 32-year-old, who enjoyed his best ever goalscoring season in English football in the campaign just gone.
But despite that interest, it looks as though Murphy has underlined his commitment to the Tractor Boys by extending his stay at Ipswich, meaning Middlesbrough's search for a new striker or two must continue elsewhere.