Background and inspiration
– Paul McCartney, discussing "Penny Lane" in a 2009 interview with
'Penny Lane' was kind of nostalgic, but it was really a place that John and I knew; it was actually a bus terminus. I’d get a bus to his house and I’d have to change at Penny Lane, or the same with him to me, so we often hung out at that terminus, like a roundabout. It was a place that we both knew, and so we both knew the things that turned up in the story.
During the 1960s, Penny Lane was a significant bus terminus for several routes, and buses with "Penny Lane" displayed were common throughout Liverpool. The name Penny Lane is also used for the area that surrounds its junction with
Smithdown Road, Smithdown Place (where the terminus was located) and Allerton Road, including a busy shopping area.
Barry Miles, the fireman and fire engine referred to in the lyrics are based upon the fire station at Mather Avenue, which is "about half a mile down the road" from Penny Lane.
 The mysterious lyrics "Four of fish and finger pies" are British slang. "A four of fish" refers to fourpennyworth of
fish and chips, while "finger pie" is sexual slang of the time, apparently referring to intimate fondlings between teenagers in the shelter, which was a familiar meeting place. The combination of "fish and finger" also puns on
 Ian Macdonald suggests an LSD influence, and that the lyrical imagery points to McCartney first taking LSD in late 1966. However, he also cites a different story, which dates McCartney's first LSD trip to 21 March 1967. Macdonald finishes with the comment: "Despite its seeming innocence, there are few more LSD-redolent phrases in the Beatles' output than the line ... in which the Nurse 'feels as if she's in a play' ... and 'is anyway'."