Penola is located 388 km south east of Adelaide and is in the heart of one of South Australia’s most productive wine growing areas. Coonawarra lies just to the north and is famous for the quality of its red wines. The town is also famous as the central location in the life of Blessed Mary MacKillop, the first Australian to be beatified.
The first Europeans to the area were the Austin brothers who arrived in 1840 and established a run of 109 square miles (282 km²). The first settlers were Scottish-born Alexander Cameron and his wife Margaret in January 1844 after obtaining an occupation licence. In April 1850 Cameron obtained 80 acres (0.3 km²) of freehold land, his station was on a pastoral lease, and established the private town of Panoola, later known as Penola.
By 1850, Cameron had built the Royal Oak Hotel and was doing extremely well financially supplying liquor to the many travellers passing through to the Victorian goldfields.
John Riddoch purchased Yallum in 1861. Riddoch grew up in poverty in the highlands of Scotland and in 1851 emigrated to try his luck on the Victorian goldfields. Within a few years he was a successful shopkeeper and wine merchant on the Geelong goldfields. He acquired 35,000 acres (142 km²) on which he ran 50,000 head of sheep.
It was Riddoch who planted the first grape vines and helped to diversify the pastoral economy of the area with an agricultural industry. In 1890 he established the Penola Fruit Growing Colony which was renamed Coonawarra in 1897.
Penola has been home to some very famous and interesting people. Among them Mary MacKillop, poets John Shaw Neilson and Adam Lindsay Gordon, Father J.T. Woods, William Henry Ogilvie, Sara Douglass and John Riddoch.
The Mary MacKillop Interpretive Centre is located in Penola. It is within close proximity to the two State Heritage sites of Petticoat Lane and the original stone schoolhouse developed by Mary MacKillop in conjunction with Father Julian Tenison Woods in the 1800s.
Penola is in the local government area of the Wattle Range Council. It is in the state electorate of MacKillop and the federal Division of Barker.
Penola is also the name of a high school in Melbourne, named after the South Australian town due to its link to its patron saint Mary MacKillop.