Johnston & Murphy traces its roots to the William J. Dudley Shoe Company, founded in 1850 in Newark, New Jersey by William J. Dudley, a European immigrant and master craftsman who had been schooled in the classic tradition of English shoemaking.

The William J. Dudley Shoe Company specialized in quality, highly durable work shoes for men, women and children. During its first 25 years, the company's growth forced five moves to increasingly larger locations. In 1880, Newark businessman James Johnston joined the company as Dudley's partner. Johnston's vision was to expand product lines and distribution channels. The company took the durability of its work shoes and built that into a line of higher-fashion footwear, which quickly became popular. In 1881, founder William Dudley died, and Johnston assumed control of the company under a new name, The James Johnston Company.

In 1884, William A. Murphy, another prominent Newark businessman from a distinguished family was intrigued by the success of Johnston's local shoe company. A partnership was formed, and the company became known as Johnston & Murphy.