Penshaw Monument stands on the south-western edge of the summit of Penshaw Hill, an isolated knoll formed by the erosion of an escarpment of the Durham Magnesian Limestone Plateau. The National Trust landholding at the site totals , including of deciduous woodland to the west of the monument. The woodland is split into Dawson's Plantation in the north and Penshaw Wood in the south. Both the summit of the hill and the woodland are considered Sites of Nature Conservation Interest by Sunderland City Council.