Bilevel optimization enjoys a wide range of applications in hyper-parameter optimization, meta-learning and reinforcement learning. However, bilevel problems are difficult to solve and recent progress on scalable bilevel algorithms mainly focuses on bilevel optimization problems where the lower-level objective is either strongly convex or unconstrained. In this work, we tackle the bilevel problem through the lens of the penalty method. We show that under certain conditions, the penalty reformulation recovers the solutions of the original bilevel problem. Further, we propose the penalty-based bilevel gradient descent algorithm and establish its finite-time convergence for the constrained bilevel problem without lower-level strong convexity. The experimental results showcase the efficiency of the proposed algorithm.