In 1900 Penshurst was an outlying bushland district on the new Illawarra railway. The nearest parish priest, Fr J. O'Driscoll, lived at Kogarah. 37 Catholic families petitioned Cardinal Moran for a Catholic school, and in 1907 Fr O'Driscoll built St Declan's Church/School for them on the present site. He arranged for the Sisters of Charity to come there each day from their convent in Hurstville. At first a horse and carriage were hired, but later they travelled by train.

The school began in 1907 with two Sisters of Charity. The original enrolment is not known, but by 1908 there were 71 pupils.

An important change occurred in 1914 when the Sisters of Charity agreed to hand over management of the school to the Sisters of St Joseph. So in 1914 two Sisters of St Joseph travelled from their convent in Arncliffe to teach 76 pupils. The school developed as a primary school with classes from Kindergarten to sixth class. The older boys above third class, however, would attend the Marist Brothers School at Kogarah.

During the 1960's Archdiocesan authorities needed to rationalise the provision of Catholic education, and so by 1968 secondary classes were ended at St Declan's. This rationalisation was taken further in 1993 when Marist Brothers' Penshurst ended primary classes and St Declan's became a fully co-educational primary school with classes from Kindergarten to Year 6. Another change was that in 1986 the Sisters of St Joseph ended their 70-year leadership of the school.

In 1972 a new classroom wing was constructed, and in 1990 an administration and staff section, which included a library, was added. Enrolments have remained strong, so that in 2000 there are 427 boys and girls from Kindergarten to Year 6.

In 2005 plans were begun to again extend the school. Property was purchased adjacent to the school and plans were drawn for new buildings and the refurbishment of older ones. The Resource Centre was also refurbished. The new buildings were completed in 2010 and were officially blessed and opened in 2011.