The Portuguese was in the running for the Anfield post back in 2004 but the Reds hierarchy instead went for Rafa Benitez.
Speaking on talkSPORT, former Liverpool midfielder Murphy categorically confirmed that Manchester United's Mourinho was gutted to have missed the Merseyside post having been in the running for the role.
Asked if he would have liked to play for Mourinho, Murphy said: "Well, strangely, I nearly did!
"When Benitez was appointed at Liverpool, it was between him and Mourinho.
"I know that for a fact. Mourinho wanted the Liverpool job massively.
"But Liverpool basically went with Benitez, because he'd just won the Spanish league title and UEFA Cup with Valencia and they thought that was more solid an appointment than someone who had only done it, and that time, in Portugal.
"I know Mourinho was massively disappointed.
"I'm gutted too, because Benitez came in and didn't want me. I'm just gutted it wasn't Mourinho because he might have wanted me to stay!"