Murdoch remained an employee and later a partner of Boulton & Watt until the 1830s, and his reputation as an inventor has been obscured by the reputations of Matthew Boulton and James Watt and the firm they founded.
William Murdoch was born in Lugar near Cumnock, Ayrshire, Scotland, the third of seven children and the first son to survive beyond infancy. A son of John Murdoch, a former Hanoverianartillery gunner and a Millwright and tenant of Bello Mill on the estate of James Boswell in Auchinleck, he was educated until the age of ten at the Old Cumnock Kirk School before attending Auchinleck school under William Halbert, author of a highly regarded arithmetic textbook. Murdoch excelled in mathematics.
Murdoch also learned the principles of mechanics, practical experimentation and working in metal and wood by assisting in his father's work. Together with his father, he built a "wooden horse" about 1763. His "Wooden Horse on Wheels" was a tricycle propelled by hand cranks. There are reports that in his youth Murdoch was responsible for the construction of one of the bridges over the River Nith; this possibly derives from his father's work in building the Craikston Bridge over Lugar Water in 1774, which William would have been involved in. He is also said to have carried out experiments in coal gas, using coal heated in a copper kettle in a small cave near his father's mill. However, there is no contemporary documentation.