George Martin, Beatles producer, is quoted as saying that "Penny Lane," together with "Strawberry Fields Forever," produced the best single ever pressed. The two songs do enjoy a special kind of kinship: both express nostalgia for places and times past. Both do so in a sweet, cheerful way and together make a centerpiece for what made the Lennon-McCartney songwriting team so special. While Lennon-McCartney are credited together with the authoring of "Penny Lane," it is mainly Paul McCartney's work, just as John Lennon takes the more credit for "Strawberry Fields." 

The two songs were issued in February 1967 as a double A-side single.

The Beatles began recording "Penny Lane" in December 1966, intending it as a song for their album Sgt. Pepper's Lonely Hearts Club Band. Instead, after it was issued as a single to satisfy record company demand for a new release, the band adhered to their policy of omitting previously released singles from their albums. In November 1967 they were eventually included on the U.S. “Magical Mystery Tour” album.

Penny Lane is a road in the south Liverpool suburb of Mossley Hill. The name also applies to the area surrounding its junction with Smithdown Road and Allerton Road as well as to the roundabout at Smithdown Place that was a major bus terminus. The roundabout was a frequent stopping place for Lennon, McCartney & George Harrison during their years as schoolchildren and students. Bus journeys via Penny Lane and the area itself subsequently became familiar elements in the early years of the Lennon–McCartney songwriting partnership. In 2009, McCartney reflected:

"Penny Lane" was kind of nostalgic, but it was really [about] a place that John and I knew ... 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.

Lennon considered the “Strawberry Fields Forever” his greatest accomplishment. The track incorporates reverse-recorded instrumentation and tape loops, and was created from the editing together of two separate versions of the song – each one entirely different in tempo, mood and musical key.

Strawberry Field was the name of a Salvation Army children's home just around the corner from Lennon's childhood home in Woolton, a suburb of Liverpool.

Lennon talked about the song in 1980: "I was different all my life. The second verse goes, 'No one I think is in my tree.' Well, I was too shy and self-doubting. Nobody seems to be as hip as me is what I was saying. Therefore, I must be crazy or a genius – 'I mean it must be high or low' and explaining that the song was psycho-analysis set to music".

Various Sources