Gerrard is one of the names being suggested as a possible successor to Rafa Benitez - under whom both he and Murphy worked at Liverpool - after an encouraging start to his managerial career at Rangers.
But Murphy suspects his former teammate is unlikely to bail on Rangers so soon.
"I doubt it (that Gerrard will be Newcastle's next manager)," Murphy told Jim White's Talksport show on Monday. "I haven't spoken to him about this so I couldn't say.
"But I doubt it because he went up there with a real ambition to try and overturn the Celtic stronghold and try and compete for that title.
"He's improved them in that year. Celtic ran away with it a little bit in the end, but still it was a much more competitive league.
"I think the job's half done for him and Gary Mac (McAllister, the Rangers assistant manager). I would be surprised, I really would."
Discussing the appeal - or lack thereof - of a move to Newcastle, Murphy added: "Most good managers want to go into a position where they can at least have the ability to chop and change a few and put their own identity on the team.
"If that's not going to happen because Mike Ashley (the Newcastle owner) is waiting to try and get the right deal to sell the club, and prepared to take the risk of getting relegated and just working with what he's got - which is massive - I'm not sure Steven Gerrard would entertain the idea.
"But on the flipside, what Newcastle United is also, is a massive football club, with a wonderful following, that is very hard to turn down if you're at a club that isn't in the Premier League and you think, 'I could be the one to go there and make a difference".
Gerrard's preparations for the coming season at Rangers are already long-underway, with seven new signings made since the end of last term.
The former Liverpool captain has also been linked with a move to Derby County, whose current manager - and Gerrard's former England teammate - Frank Lampard is expected to leave Pride Park for Chelsea.
Could Gerrard quit Rangers to replace Benitez at Newcastle?
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