In the light of declining numbers of priests, each parish is being asked to work more closely with its neighbouring parishes.
Five Kerry parishes are now without a resident priest and are serviced by priests from outside parishes.
There will be 12 pastoral areas in the diocese, which also includes parts of north and west Cork.
Parishes are being asked to cooperate and to form pastoral areas together, involving clergy and lay people.
The diocese has 10 fewer priests than it had two years ago. Also, four long-serving priests retired earlier this year, but no new priest has been ordained for the diocese this year.
Bishop Murphy, who has for several years been calling for more active involvement by lay people in the work of the Church, conceded the Church in his diocese was faced with a great challenge.
By facilitating change, the diocese was ensuring that communities were better resourced to meet their pastoral needs, he said.
“It is together that we will shape our future by identifying areas of concern and how we can respond to them as pastoral areas and as a diocese,” he said.
A vicar forane will co-ordinate each pastoral area, working with all the priests in the area and with representatives from each parish on an area pastoral council.
In the course of the three-year plan, it is envisaged the work of the vicar forane and the pastoral councils will enable new developments to take place at local level, by discussing the needs of parishes and ways of working to respond to those needs.
Bishop Murphy announced the following appointments for three years:
Dean of the Chapter: Very Rev Seán Hanafin, PP, VF.
Vicars General: Mgr Daniel O’Riordan, PP, VG, VF. Mgr Declan O’Connor, PP, VG.
West Kerry: Annascaul, Ballyferriter, Castlegregory, Dingle — Canon Tomás Looney, PP, VF.
Tralee: Spa, St John’s, St Brendan’s — Very Rev Seán Hanafin, PP, VF.
North Kerry: Abbeydorney, Ardfert, Ballyheigue, Causeway — Very Rev John Fitzgerald, PP, VF.
North Kerry: Ballybunion, Ballydonoghue, Ballylongford, Moyvane, Tarbert — Very Rev John Lawlor, PP, VF.
North Kerry: Duagh, Listowel, Lixnaw — Canon Séamus Linnane, PP, VF.
Castleisland: Ballymacelligott, Brosna, Castleisland, Killeentierna, Knocknagoshel — Mgr Daniel O’Riordan, PP, VG, VF.
Mid-Kerry: Firies, Fossa, Glenflesk, Kilcummin, Killarney — Very Rev Nicholas Flynn, Adm, VF.
Mid-Kerry: Beaufort, Castlemaine, Glenbeigh, Killorglin, Milltown — Canon Michael Fleming, PP, VF.
South Kerry: Ballinskelligs, Caherdaniel, Cahersiveen, Valentia, Waterville — Canon William Crean, PP, VF.
Kenmare: Glengarriff, Kenmare, Kilgarvan, Sneem, Tuosist — Venerable Thomas Crean, PP, VF.
Beara: Adrigole, Allihies, Castletownbere, Eyeries, Canon Patrick Sheehan, PP, VF.
Millstreet: Ballydesmond, Boherbue, Dromtarriffe, Millstreet, Rathmore — Very Rev Liam Comer, PP, VF.