Dunphy said in a statement released by Penn that he was "honored" that La Salle officials thought he "would be a suitable candidate."
The La Salle job opened when Coach Billy Hahn resigned in the wake of rape allegations involving his players.
"My commitment remains with Penn and continuing to achieve the success that the men's basketball program strives for on an annual basis," Dunphy said.
La Salle Athletic Director Thomas Brennan said that school had "made a 110 percent effort -- financially and otherwise" to get Dunphy, who graduated from La Salle.
Hahn, along with women's basketball Coach John Miller, resigned in July amid a pair of rape cases -- both of which involve men's basketball players and a former member of the women's team.