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The gaelic name Mac a'Phi gives the English phonetic spelling Macafie, sometimes shortened to Macfie or MacPhee. However, in its original form, the name was probable Mac Dhuibh Shith or "Son of the Dark Fairy". The "dark fairy" is synonymous with the dark stranger who must be the first to cross the threshold at the turn of the new year, bringing presents of food and drink, and symbolising good fortune.
The identity of this stranger is mysterious but legend gives the family of MacPhee its descent from this supernatural creature, who was thought to come from the sea. So the descent of the MacPhees is shrouded in legend and traditional folklore.

The MacPhees of Colonsay were hereditary keepers of the records of the Lords of the Isles. Unfortunately these records have vanished almost without trace, with the exception of one medieval charter which remains extant. This charter is written in gaelic, which shows that the administration of the Lordship was carried out both in Latin and in the vernacular.

After the abolition of the Lordship of the Isles, the MacPhees remained loyal to the MacDonald clan, and shared in the downfall of the powerful MacDonalds when the MacPhee chief was tricked, with other clan chiefs, into signing the infamous Statutes of Iona. When Colonsay passed into other hands, many of the MacPhee clansmen settled in the Cameron country of the mainland, while others resettled on other islands.

The clan became so completely rootless that today the name MacPhee is equated with the profession of itinerant tin-smiths known as "tinkers".