The actress has signed up to play the role of Eva, who is the long-lost mother of existing character Anita Roy (Saira Choudhry), The Sun reports.
Murphy, who has three children with footballer Harry Kewell, previously played Emmerdale barmaid Tricia Dingle for six years until 2004. She later appeared on ITV1 reality show I'm A Celebrity... Get Me Out Of Here! and went on to establish a career as a TV presenter.
A Hollyoaks source said: "Bosses have been trying to sign her up for a while now - but she's always put her family first. But after years out of acting, she wants to give it another go.
"Sheree has started filming scenes and was very nervous being on set again, but she's a professional and has taken to Hollyoaks like a duck to water. She's loving it - and everyone loves having her on the team."
Hollyoaks is currently undergoing an overhaul following the arrival of new producer Paul Marquess. He has already axed three members of the Ashworth family and shaken up the soap's core production team.
Marquess started working on the teen drama last month following the departure of his predecessor Lucy Allan, who was in charge of production for just over 12 months.