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Penny was born in Toronto in 1958. She earned a Bachelor of Applied Arts (Radio and Television) from Ryerson Polytechnical Institute (now Ryerson University) in 1979. After graduation, at age 21, she embarked on an 18-year career as a radio host and journalist with the Canadian Broadcasting Corporation. At the start of her broadcasting career, Penny took postings at locations far from friends and family, and to help deal with feelings of loneliness and bitterness during this period, she increasingly turned to alcohol. At the age of 35, she admitted to an alcohol problem, and has been sober since. Shortly afterward, she met her future husband Michael Whitehead, a Montreal cardiologist, on a blind date.

After their wedding, Penny left the CBC to take up writing. Although she started on a historical novel, she had difficulty finishing it, and eventually switched to mystery writing. She entered her first novel, Still Life, in the prestigious "Debut Dagger" competition in the United Kingdom, and placed second out of 800 entries. The novel did win a number of other awards, including the "New Blood" Dagger award in the United Kingdom, the Arthur Ellis Award in Canada for best first crime novel, the Dilys Award, the Anthony Award and the Barry Award for Best First Novel in the United States.

Penny has published a further four novels...with another expected in September 2010...and has enjoyed remarkable success, garnering major crime novel award nominations for every one of her novels and subsequently winning several of those awards.

Her oeuvre features Chief Inspector Armand Gamache, head of the homicide department of the Sûreté du Québec. The novels, although set in the province of Quebec, feature many hallmarks of the British whodunit genre, including murders by unconventional means, bucolic villages, large casts of suspects, red herrings, and a dramatic disclosure of the murderer in the last few pages of the book.

In 2009, Penny helped to launch a new award for aspiring Canadian mystery writers, the Unhanged Arthur for Best Unpublished First Novel.

Penny and her husband currently live in a village south of Montreal.