Wilson had earlier come through a deciding frame to beat Joe Perry but, from 3-2 up against Murphy, was unable to close the door.
Former world champion Murphy, who made a 124 break in the fourth frame, rallied having fallen behind to book his place in the quarter-finals, where he'll face Sam Baird after he beat Ali Carter 4-2.
Also through is Daniel Wells, who must feel like this is his week after slated round one opponent Ronnie O'Sullivan withdrew.
Wells beat fellow Welshman Matthew Stevens 4-0 to become the first man to seal a quarter-final spot and it's another all-Welsh affair to come after Ryan Day beat Ding Junhui 4-2.
John Higgins, who knocked in a 147 break on Wednesday, saw his run ended as Alfie Burden won 4-2.
Higgins won two of the first three frames but was disappointing thereafter as Burden moved within one win of what would be a career-best semi-final spot.
Standing in Burden's way is Mark Allen, who came from 2-1 down to beat Graeme Dott 4-2, while Judd Trump beat Ian Burns 4-1 and will face Stuart Carrington, who won 4-3 against Tian Pengfei.
Afternoon session - last 32
Kyren Wilson battled back from 3-1 down to book his place in the last 16 of the Scottish Open with a 4-3 win over Joe Perry.
Wilson, the world number 10, hit breaks of 63, 57 and 82 to reel off the final three frames at Glasgow's Emirates Arena.
Home favourite Graeme Dott is also through after edging Belgian Luca Brecel in a final-frame decider.
Ali Carter beat David Lilley 4-1, while there were also wins for Stuart Carrington and Ian Burns.
Fresh from his 147 break in the second round, John Higgins secured back-to-back whitewash victories with a 4-0 win over Yan Bingtao.
The world number four won the opening frame with a break of 72 before sealing the match by hitting 104 as he continued his superb form in Glasgow.
Shaun Murphy also progressed through to the last 16 with a 4-2 win over Nigel Bond. Murphy hit a 141 break to take a 3-1 lead but Bond replied with a 136 break, before Murphy closed out the match.
Wales' Ryan Day won through 4-2 against China's Zhang Anda, winning the final two frames with century breaks.
Ross Muir, who knocked out defending champion Neil Robertson on Wednesday, lost 4-2 to Sam Baird.
Mark Allen continued his fine form by comfortably sealing his last-16 place with a 4-1 win against Yuan Sijun.
The Northern Irishman, who was beaten in the UK Championship final last week, wasn't at his best and two half-century breaks in the opening frame were the best he managed in defeating the world number 68.
Judd Trump was more fluent in his 4-1 win over Zhang Jiankang. Trump hit breaks of 127, 60, 89 and 101 in cruising into the last 16.
Matthew Stevens edged out Jimmy Robertson 4-3 while Alfie Burden secured a last-16 meeting with John Higgins by beating Zhang Yong 4-3.
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