Murnane's first two books, Tamarisk Row (1974) and A Lifetime on Clouds (1976), seem to be semi-autobiographical accounts of his childhood and adolescence. Both are composed largely of very long but grammatical sentences.

In 1982, he attained his mature style with The Plains, a short novel about a young filmmaker who travels to a fictive country far within Australia, where his failure to make a film is perhaps his most profound achievement. The novel is both a metaphysical parable about appearance and reality, and a parodic examination of traditions and cultural horizons. The novel depicts an abstracted Australia, akin to something out of mythology or fable. The novel was followed by: Landscape With Landscape (1985), Inland (1988), Velvet Waters (1990), and Emerald Blue (1995). A book of essays, Invisible Yet Enduring Lilacs, appeared in 2005, and a new work of fiction, Barley Patch, was released in 2009. All of these books are concerned with the relation between memory, image, and landscape, and frequently with the relation between fiction and non-fiction.

Murnane is mainly known within Australia. A seminar was held on his work at the University of Newcastle in 2001. Murnane does, however, also have a following in other countries, especially Sweden and the United States, where The Plains was published in 1985 and reprinted in 2004 (New Issues Poetry & Prose), and where Dalkey Archive Press has recently issued Barley Patch and will be reprinting Inland in 2012. In 2011, The Plains' was translated into French and published in France by P.O.L, and in 2012 will be published in Hungarian. In July/August 2017, The Plains was the number 1 book recommendation of South West German Radio (SWR2). His works have been translated into Italian (Velvet Waters as Una Melodia), German (The Plains as Die Ebenen, Border Districts as Grenzbezirke, Landscape With Landscape as Landschaft mit Landschaft, all publ. Suhrkamp Verlag), Spanish (The Plains as Las llanuras, and Something for the Pain as Una vida en las carreras, all published by Editorial Minúscula), Catalan (The Plains as Les planes, also published by Editorial Minúscula), Swedish (Inland as Inlandet, The Plains as Slätterna, Velvet Waters as Sammetsvatten and Barley Patch as Korntäppa) and Serbian (The Plains as Ravnice; Inland as Unutrašnjost, both published by Blum izdavaštvo 2025).