In the summer of 1985 Morley moved to Northampton Town for £20,000 making his debut of Burnley on 17 August 1985. His move to Northampton arose after manager Graham Carr moved from Nuneaton to Northampton, and took Morley and Eddie McGoldrick with him. Morley captained Northampton, as they won the 1986–87 Fourth Division championship by a nine point margin.
After scoring 39 league goals in 139 appearances for Northampton, Morley was signed by manager Mel Machin for Manchester City in January 1988 as part of an exchange deal that saw Tony Adcock move to the County Ground. The deal valued Morley at £235,000. He made his debut for City 23 January 1988 in a 2–0 home defeat by Aston Villa. He scored 18 league goals for Manchester City, including the equaliser at Bradford City on the last day of the 1988-89 season that meant Manchester City won promotion, a point ahead of Crystal Palace. On 23 September 1989, he put City 2-0 ahead in the famous 5-1 derby win over Manchester United in the First Division. When manager Machin was sacked by Manchester City chairman Peter Swales, his replacement Howard Kendall saw no place in his side for Morley.
Morley played for Reading between 1995 and 1998. In 1996 Morley suffered a severe head injury playing against Portsmouth. Elbowed by Jon Gittens Morley's forehead was crumpled, a sliver of shattered bone entering his eye. He suffered a depressed fracture above his right eyebrow. The injury required forty staples, extensive surgery including facial reconstruction, four days in hospital and the insertion of six metal plates in his skull which will remain for the rest of his life. He was Reading's player of the season for season 1996–97. During his time at Reading, he spent two summers on loan to Norwegian club Brann. He also played for Sogndal in 1998.