Murphy was signed by Steve Kean in June after leaving Fulham and put pen to paper on a two-year contract at Ewood Park.
But the 35-year-old former Liverpool and England midfielder has struggled to acclimatise to life at npower Championship level, with Appleton's standing as the fourth man to select Rovers' first XI since Kean's September departure failing to aid the settling-in process.
When Blackburn found themselves 3-0 down after a dismal first-half display against struggling Peterborough 10 days ago, Murphy was replaced at the interval before the eventual deficit was reduced to 3-2.
He failed to make the matchday 18 for last week's 1-0 loss at Bolton or Sunday's goalless FA Cup quarter-final draw at Millwall despite a raft of injury problems among Appleton's squad, and centre-back Scott Dann was installed as Rovers' new skipper before the latter contest.
"I had an honest conversation with Murph and just explained to him that I want to move the football club forward, I want to think about the future of the football club," Appleton said.
"I explained that I was going to make Scott the new captain because I think he's someone who leads by example.
"It was a difficult decision to make but I think it's one that's going to benefit everyone at the football club. Danny took it very professionally, as I expected him to do."