Although he had grown up in an Irish-Catholic household. Murphy converted to Islam in the 1990s, eventually moving to Turkey with his wife. A subsequent Middle Eastern influence can be heard in his later albums. In particular, Murphy has been inspired by the mysticism of Sufism. 1992's Holy Smoke mixed some traditional Turkish influences into the music while continuing the sound pioneered on Deep.

The album was unable to recapture the momentum of Deep, and in the post-grunge alternative landscape, the more pop-flavored album seemed anachronistic, and the choice of the odd, disheveled-Murphy Anton Corbijn photo used on the cover baffled many fans. In 1995, Murphy embraced a lower-key, ambient pop sound for Cascade, featuring producer Pascal Gabriel, guest work from "infinite guitarist" Michael Brook, and overall a much stronger incorporation of electronics.

This album was also to be his last major collaboration with Paul Statham, who departed to form Peach Union with Pascal Gabriel and eventually write songs for Dido and Kylie Minogue. Cascade was also Murphy's last original release for Beggar's Banquet records, which had been his label since Bauhaus. Shortly after this departure, Murphy recorded the Recall EP for the newly-formed Red Ant records, featuring a few new songs and some new, heavily electronic versions of older material, reworked in conjunction with Sascha Konietzko, Bill Rieflin and Tim Skold of the band KMFDM. Once again, he became label-mates with former Bauhaus alums Love and Rockets, who had also signed to Red Ant. This generated a significant number of rumours regarding a possible reformation of Bauhaus.

While Red Ant quickly folded, Bauhaus did reform in 1998 for the Resurrection tour, one performance of which (at the Hammerstein Ballroom, New York City) was recorded and released on DVD by Metropolis Records as Gotham. The tour was a success, although Murphy refused to perform certain songs, because of his adherence to Islam, such as "Stigmata Martyr" and "St. Vitus' Dance." He cited their religious overtones as objectionable.