When his former professor, William S. Clark was asked by the Japanese government to assist in the founding of Sapporo Agricultural College (now Hokkaido University), Penhallow accompanied Clark and another MAC graduate, William Wheeler, to teach botany and chemistry.

While Penhallow was working at Houghton Farm, Gray was contacted by Sr John Dawson of McGill University who was looking for a suitable person to fill the vacancy left at McGill with the death of botanist James Barnston.

[4] Penhallow accepted and became a lecturer at McGill and in 1883 became the first botanist appointed to the Macdonald Chair of Botany.

During this time Penhallow delved into the newly developing science of paleobotany with the encouragement of Dawson.

After allegedly suffering from a mental breakdown in 1909, Penhallow died on the SS Lake Manitoba during a voyage from Montreal to Liverpool, England.