There are a number of accounts of the foundation of a church at Penkridge. It is suggested by some scholars it was founded as a Perpetual Chantry sometime between 910 and 913 A.D.

England was divided between Saxon and Dane, the boundary being the Watling Street (now the A5). Ethelfreda, the daughter of King Alfred the Great, the Lady of Mercia, led the Saxon forces in the reconquest of the Danelaw. The Danes, who had been confined to their stronghold in Stafford, made a raid through Brewood, Chesterton Walls and Bridgenorth — which would have brought them out into the Severn Valley. However they were brought to Battle by Ethelfreda at Danescourt (Wolverhampton) and defeated. Retreating towards Stafford, they suffered further defeat in several small rearguard skirmishes before being finally caught at Penkridge crossing the river Penk at what is now Bull Bridge on the A449. Here they were severely defeated and this led to the fall of their stronghold in Stafford. After the battle a Chantry Chapel was established at the burial place of the Saxon dead and a Priest installed to say Mass for their souls to lessen the time spent in purgatory. There are many examples of the institution of perpetual prayers on death anniversaries from the early tenth century in England, especially in the reign of King Athelstan, 924 - 39. In 1321 two Chantries still existed in Penkridge, one named the King's Chantry dedicated to celebrate mass for the souls of the tenth century kings who were thought to be the founders of the church and the other dedicated to the Blessed Virgin Mary. Each had its own priest who was also a prebendary and each received ten and a half pence per week plus three and a half pence from the Common Fund.

Tradition in the later middle ages attributed the foundation of the Royal Free Chapel of St Michael at Penkridge to King Edgar (957-75) as a Collegiate Church, with a number of priests living in a community under a Dean and serving the spiritual needs of the neighbourhood. King Edgar made Penkridge his headquarters during a campaign to deal with a combined Danish-Irish invasion entering the country by way of Cheshire. Since at that time, the seat of government was with the King, Penkridge for a brief period enjoyed the distinction of being the capital of England. In gratitude for the support he received locally he granted a charter making Penkridge Church a Royal Chapel or "Peculiar".

A safer guide is the evidence of the Liber Niger, the register of John Alen, Archbishop of Dublin and Dean of Penkridge from 1528 to 1534; a note written in his own hand states that the original founder of the church was King Eadred (946-55) A.D. and by 970 A.D. there was an established church in Penkridge dedicated not to St Michael but to Our Lady, St Mary.

In 1136 King Stephen gave the church to Roger de Clinton Bishop of Coventry and Lichfield. By the early 1180's Penkridge had been recovered by the crown and restored to the status of a Royal Free Chapel. However in 1189 King Richard 1, in order to raise funds for his crusade, sold to Hugh de Nonant, Bishop of Lichfield the vills and churches of Cannock and Rugeley regardless of the fact that Cannock church was attached to the prebend of Cannock in Penkridge. The Dean of Penkridge, Elias of Bristol, entered into a protracted dispute with the Dean and Chapter of Lichfield, claiming that Cannock was part of the Deanery of Penkridge. The Bishop disputed his claim and announced his intention of visiting Penkridge to enforce his rights. Elias obtained a writ; the case was heard by three papal judges who decided in favour of Penkridge, forbidding the Bishop to set foot on the lands of the Penkridge Deanery and the Bishop was turned back at the boundary. Penkridge and Lichfield promised to support each other 'without charging expenses'. Whenever the Dean of Penkridge visited Lichfield he was received as a brother of the church in choir and chapter and on the day of his death and its anniversary Lichfield would celebrate the office of the dead as for a canon. This splendid, independent Elias was succeeded in the reign of King John by Henry of London.