Banksia penicillata is a shrub that typically grows to a height of 4 m (13 ft) and has smooth bark but does not form a lignotuber.

[7][8] In the same year (1996), Kevin Thiele and Pauline Ladiges raised subspecies penicillata to species status as B. penicillata in Australian Systematic Botany, based on the differences in habit, bark, leaf shape, indumentum and flower colour, and the fact that the two taxa were so far from each other.

[11][12] A 2013 molecular study by Marcel Cardillo and colleagues using chloroplast DNA and combining it with earlier results placed B. penicillata as a part of a lineage that gave rise to the three subspecies of B.

[13] Banksia penicillata grows on and near rocky sandstone cliffs in forest and woodland in a few locations in the Blue Mountains west of Sydney.

[2][11] Fieldwork in 2021 established that intervals of under 12 years between bushfires severely compromised the ability of the species to reproduce afterwards, with little or no seedling recruitment observed.