A native of Cork, Murphy began his performing career as a rock musician. After turning down a record deal, he made his professional acting debut in the play Disco Pigs in 1996. He went on to star in Irish and UK film and stage productions throughout the late 1990s and early 2000s, first coming to international attention in 2003 as the hero in the post-apocalyptic film 28 Days Later. Murphy's best-known roles are as villains in two 2005 blockbusters: the Scarecrow in the superhero film Batman Begins, and Jackson Rippner in the thriller Red Eye. Next came two contrasting, widely acclaimed starring roles: his Golden Globe Award-nominated performance as a glam transgender orphan teen in 2005's Breakfast on Pluto and a turn as a 1920s Irish revolutionary in the 2006 Palme d'Or winner, The Wind That Shakes the Barley. In 2010, Murphy played a corporate heir and the target of Leonardo DiCaprio's dreamscape heist in the highly acclaimed blockbuster Inception.

A resident of London since 2001, Murphy often works in or near the city and has expressed no desire to move to Hollywood. Uncomfortable on the celebrity circuit, he customarily gives interviews about his work, but does not publicly discuss details of his private life and had never appeared on a television talk show until 2010.

Born in Douglas and raised in Ballintemple, two suburbs of Cork, Cillian Murphy is the eldest of four children. His father, Brendan, works for the Irish Department of Education, and his mother is a French teacher. Not only are his parents educators, but his aunts and uncles are also teachers, as was his grandfather. Musicianship also runs in the family, and Murphy started playing music and writing songs at age ten.

Murphy attended the Catholic school Presentation Brothers College, where he did well academically, although he did get into trouble often, sometimes getting suspended, until deciding in his fourth year that misbehaving was not worth the hassle. Not keen on sport, a major part of life at PBC, Murphy found that creative pursuits were not fully nurtured at the school. Still, it was there that he got his first taste of performing, when he participated in a drama module presented by Pat Kiernan, the director of the Corcadorca Theatre Company. Murphy later described the experience as a "huge high" and a "fully alive" feeling that he set out to chase. His English teacher, the poet and novelist William Wall, encouraged him to pursue acting, but at this stage, to Murphy, performing meant dreams of becoming a rock star.

In his late teens and early twenties, Murphy worked toward a career as a rock musician, playing guitar in several bands alongside his brother Pádraig. The Beatles-obsessed pair named their most successful band The Sons of Mr. Greengenes, after a 1969 song by another idol, Frank Zappa. Murphy sang and played guitar in the band, which he has said "specialised in wacky lyrics and endless guitar solos." In 1996, The Sons of Mr. Greengenes were offered a five-album record deal by Acid Jazz Records, but they did not sign the contract. Because Murphy's brother was still in secondary school, their parents disapproved. Additionally, the contract offered little money and would have ceded the rights to Murphy's compositions to the record label.

Also in 1996, Murphy began studying law at University College Cork (UCC), but he failed his first year exams because, as he put it, he had "no ambitions to do it." Not only was he busy with his band, but he has admitted that he knew within days after starting at UCC that law was the wrong fit for his artistic personality. Furthermore, after seeing Corcadorca's stage production of A Clockwork Orange, directed by Kiernan, acting had begun to pique his interest. His first major role was in the UCC Drama Society's amateur production of Observe the Sons of Ulster Marching Towards the Somme, but, according to Murphy, his primary motivation then was to party and meet women, not to begin an acting career. Nonetheless, he began to transition away from working as a rock musician, about which he later remarked, "I think there's such a thing as a performance gene. If it's in your DNA it needs to come out. For me it originally came out through music, then segued into acting and came out through there. I always needed to get up and perform."

Murphy hounded Pat Kiernan until he got an audition at Corcadorca, and in September 1996, he made his professional acting debut on the stage, originating the part of a volatile Cork teenager in Enda Walsh's Disco Pigs. He later observed, "I was unbelievably cocky and had nothing to lose, and it suited the part, I suppose." Originally slated to run three weeks in Cork, Disco Pigs ended up touring throughout Europe, Canada and Australia for two years, and Murphy left university and his band. Though he had intended to go back to playing music, he secured representation after his first agent caught a performance of Disco Pigs, and his acting career began to take off.

From 1997 to 2003, Murphy starred in independent films, such as John Carney's On the Edge, in short films, including the Irish/English language short Filleann an Feall, and in the BBC television miniseries adaptation of The Way We Live Now. In addition to Disco Pigs, he starred in many other plays, including Shakespeare's Much Ado About Nothing, Neil LaBute's The Shape of Things, and Chekhov's The Seagull; Murphy considers this stage work to have been his "training ground." Murphy also reprised his Disco Pigs role for the 2001 indie film version by Kirsten Sheridan, performing his original song "So New" over the closing credits and singing The Kinks' "You Really Got Me" in a pub karaoke scene. During this period, he moved from Cork, relocating first to Dublin for a few years, then to London in 2001.

Murphy's onscreen performance in Disco Pigs caught the eye of director Danny Boyle when casting the lead for 28 Days Later. Released in the UK in late 2002, by the following July 28 Days Later had become a sleeper hit in America and a major success worldwide, putting Murphy before a mass audience for the first time. His performance as pandemic survivor Jim earned him nominations for Best Newcomer at the 2003 Empire Awards and Breakthrough Male Performance at the 2004 MTV Movie Awards. ComingSoon.net's review of the film said, "Cillian Murphy is a superb find... and he gives a breakout performance as a man torn apart by the new world into which he's awakened."

In late 2003, Murphy starred as a lovelorn, hapless supermarket stocker who plots a bank heist with Colin Farrell in Intermission, which became the highest-grossing Irish independent film in Irish box office history (until The Wind That Shakes the Barley broke the record in 2006). Murphy also appeared in supporting roles in his first Hollywood films, Cold Mountain and Girl with a Pearl Earring. For the latter film, he learned to chop meat in an abattoir to prepare for his role as a butcher, even though he is a vegetarian. In 2004, he toured Ireland in the titular role of The Playboy of the Western World, a Druid Theatre Company production under the direction of Garry Hynes, who had previously directed Murphy in Seán O'Casey's Juno and the Paycock and John Murphy's The Country Boy, also for Druid.