A commuter village in Perth and Kinross, Murthly lies to the south of the River Tay, 5 miles (8 km) southeast of Dunkeld. Located 2 miles / 3 km west northwest of the village, the 15th-century Murthly Castle and estate were acquired by Sir William Stewart of Grandtully in 1615. Murthly gained a railway station in 1856 on the Perth & Dunkeld Railway. This closed in 1965, although the Highland Line remains an important transport artery between Perth and Inverness.
Perth and District Asylum (or Murthly Hospital) opened here in 1864 to treat Perthshire's 'pauper lunatics', intended to expose patients to healthy fresh air. It was used as a military psychiatric hospital during the First World War and, by the 1960s, it was linked to the Murray Royal Hospital in Perth. It finally closed in 1984 and most of the buildings demolished, with the housing development of Druid's Park doubling the size of the village.