Murray's Arm was the only remaining body part, besides his head to be recovered after Guybrush Threepwood shot one of the longboats he was on during LeChuck's seige on Plunder Island Fort. The arm wore a floatie which made it float in the water, and grasped a pirate sword.
The remains floated back towards the ship after all four of LeChuck's longboats had been decimated by Guybrush using the cannon previously manned by Bloodnose the Pirate.
It was later made an exhibit in the pirate themed restaurant Planet Threepwood on Jambalaya Island. Coincidently, Murray was the bouncer and announcer of the restaurant near its entrance. It was unknown whether or not he knew that his arm was in the exhibits.
Threepwood used his makeshift Gaff to fish it out of the sea.