In 1900, he was appointed Dean of Melbourne, and served as Vicar-General from 1908 to 1913. On 2 November 1912, he was appointed Bishop of Sale, a position he held until his death on 5 January 1925, in a private hospital in Dublin, Ireland where he was receiving medical treatment.[4]
He was noted for his administration, where he raised £25,000 over three years to build St Patrick's College in Sale, which opened in 1922, and when he died both the parish and college were debt-free. The Bishop Phelan Stadium, on the St Patrick's Campus of the Catholic College Sale, is named in his honour.
Phelan's brother Micheal became a Jesuit priest and also ministered in Australia.