Murphy told the local WISN TV that he submitted his resignation yesterday and would retire on June 12, ending his 22-year career on the Oak Creek force.
Not sure what he will do after retirement, the 52-year- old officer said, he is considering teaching.
"I didn't heal enough for the doctors to deem me eligible to go back to work," he said.
Six Sikh worshippers were killed in the attack and three others were wounded. The lone gunman killed himself after he was taken down with a rifle shot by another officer Sam Lenda.
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He fought back until help arrived and ordered his fellow officers to protect the worshippers stranded inside the building.
Over the weekend Murphy was felicitated by top national honors by US President Barack Obama at the White House.
Murphy is now a national hero and highly revered by the Sikh community.