Istigobius murdyi is described as a new species of gobiid fish from the continental shelf of northern Australia and Indonesia. The new species is generally similar in morphological features to other species in the genus, differing in having the anterior nasal tube just above the upper lip vs. well above the upper lip. Other distinctive features included cycloid scales on the nape, a narrow suborbital region, and a distinctive vertical black bar below the eye. The species occurs in deeper water (60–100 m) than other known species in the genus. It appears to be most closely related to Istigobius spence, which occurs in very shallow coastal reef environments.