In 1860, at the age of 18, Mary MacKillop left her native Melbourne to work in Penola as a governess for her Uncle Alexander Cameron and Aunt Margaret (nee MacKillop). The Camerons were among the first settlers in the district, and lived in a slab homestead overlooking a lagoon on the sprawling Penola Station.
Alexander Cameron was widely known as the King of Penola, and he opened the Royal Oak Hotel in 1848 with one of the earliest hotel licences in South Australia. The Cameron family introduced Mary to race days, dances and other joys of country life. She mixed with wealthy family friends like the MacArthurs of Limestone Ridge and the Riddochs of Yallum Station, but it was 'the gentle learned priest' Father Julian Tenison Woods who was to have the most profound influence on her life.
Father Woods' parish covered 56,000 square kilometres of bushland, and he could regularly be found preparing sermons and celebrating Mass beneath the shelter of towering River Red Gums such as the Father Woods Tree. He inspired Mary's commitment to the education of all children, and lessons were held in a small cottage, St Joseph's Church, and then a stable formerly located on Mary MacKillop Park. Mary's brother, John MacKillop, converted the stable into a schoolroom which could accommodate up to 40 students, and it was here that the Cradle of the Sisters of St Joseph of the Sacred Heart began. On 19 March 1866, the Feast of St Joseph, Mary wore a black dress and signed off as "Mary, Sister of St Joseph" for the first time. In 1867, the classes shifted to a purpose-built school building now referred to as the Woods-MacKillop Schoolhouse, which is located on the corner of Petticoat Lane.
Within weeks of the schoolhouse opening, Mary MacKillop boarded the steamship SS Penola for the journey to Adelaide, where she went on to establish the Cathedral Hall School, officially took vows and became Mary of the Cross.
The Sisters of St Joseph continued her work in Penola, teaching and living in the schoolhouse off and on up until 1889. When the new St Joseph's School (now the Mary MacKillop Memorial School) opened in 1936, the schoolhouse became a parish hall. In 1989, it was re-dedicated as the Woods-MacKillop Schoolhouse by Archbishop Faulkner following a lengthy restoration process, and the heritage-listed building now operates as a museum.