Located just 20km from the Victorian border in the Coonawarra region, has hosted race meetings since the mid-1800s and is attributed with holding the first official race meeting in South Australia in 1856. In those formative years the track was laid out around the Penola streets and landmarks such as the Royal Oak Hotel and Presbyterian Manse that are still standing. Racing began on the current racecourse site in 1906 and has become home to several clubs including the Penola Racing Club, Kalangadoo Racing Club and Millicent Racing Club. The Kalangadoo Racing Club, formed in 1898, merged with the Penola Racing Club in 1979. Millicent Racing Club, formed in 1874, still shares the course with Penola Racing Club. Penola Racing Club conducts seven meetings each year with the highlight being the Penola Cup in April. Millicent Racing Club races once each year at Penola, also in April with the feature race being the Millicent Cup.

Penola racecourse has a circumference of 1835 metres and a short home straight of 280 metres. The course is circular with some tight turns that favours well drawn runners. There is a significant dip at the 450m. Races at Penola racecourse are conducted over distances from 1100m to 2000m. A long chute leaves the course proper at the 1500m and provides starts for races over 1600m and 1700m.