McPhee was born in Montreal, but spent most of his youth in Toronto. He studied composition and piano in Baltimore with Gustave Strube, Arthur Friedheim, Paul La Flem, and Isidore Phillipp. In 1924 McPhee went to Paris to pursue his musical studies and his career as a pianist, but made little headway.
During this period and the next five years in New York, McPhee received considerable recognition for such works as his "Concerto for Piano and Orchestra," "Concerto for Piano and Wind Octet," "Sea Shanty Suite," and orchestral scores for two experimental films by Ralph Steiner, H20 and Mechanical Principles.
Sometime during the late 1920s, McPhee first heard recordings of some of then virtually unknown music of the gamelan of Bali, ensembles of tuned gongs, gong chimes, metallophones, cymbals, and drums.
Around the same time, McPhee met Jane Belo, who had studied anthropology and who was also interested in traveling to Asia. Although he was actively homosexual, McPhee and Belo were soon involved in an intense sexual relationship. They were married in 1930.
Belo was aware of McPhee's homosexuality, but she felt that a relationship with "a feminine man" was an important stage in her emotional development, and that it also revealed "aspects of masculine protest and narcissism" on her part.
Fascinated by the new possibilities of Balinese timbre and percussive colors, musical form and instrumental technique, McPhee went to Indonesia; what began an exploratory trip became an extended period of residence in Bali until 1939.
McPhee made an extensive survey of the many different types of ensembles throughout the island; his house became a center of musical activity; he encouraged and subsidized children's training in music and dance as well as the maintaining of the older musical traditions.
Since the Balinese were relatively tolerant of homosexuality, McPhee also soon threw himself into the sexual exploration of Balinese men. His sexual involvements with Balinese men led eventually to a separation from Belo.
McPhee wrote to one friend, "I was in love at the time with a Balinese, which she knew, and to have him continually around was too much for her vanity. So it ended as I had foreseen at the beginning . . . ."
McPhee was able to live in Bali only because Belo had the money (which came from her family and her wealthy ex-husband) to do so. They were divorced in 1938 shortly before they both left Bali.
McPhee returned to the US and resided in New York in the 1940s, where he was among the talented, young generation of composers that included Aaron Copeland and Henry Cowell.
Besides various musical compositions and articles on music and dance, McPhee's major publications are Music in Bali (1966), one of the definitive works on Balinese instrumental music and orchestral technique, and A House in Bali (1946), a beautifully written account of his stay on the island.
Beginning with piano transcriptions of music for the Balinese shadow puppet play, known as Wyang Kulit, McPhee started to incorporate elements of Balinese music into his own compsitions.
For his two major orchestral works, Tabuh-Tabuhan (1936) and Symphony No. 2 (1957), McPhee received wide acclaim as well as many wards and commissions "for his unprecedented combination of traditional Indonesian music with western orchestral techniques, which resulted in original music of great distinction.
Besides his musical talents, McPhee was an excellent photographer. As a faculty member of the Music Department at UCLA from 1960 until his death in New York from cirrhosis of the liver, McPhee taught composition and ethnomusicology, contributed greatly to the study of world music.
Through his writing, his musicological research, and his example as a composer, McPhee helped to shape an entire American musical tradition carried on by composers such as John Cage, Lou Harrison, and Steve Reich.