Addressing about 5,000 graduates at the Ivy League school in Philadelphia on Monday, the Oscar- and Tony-winning actor said the academic ceremony was "a little overwhelming and out of my comfort zone."
And that was his reason for accepting the invitation to speak, he said.
"I had to come exactly because I might make a fool of myself," said Washington. "I've found that nothing in life is worthwhile unless you take risks. Nothing."
The 56-year-old star of "Malcolm X" and "Philadelphia" delivered a humorous speech with a sobering truth: Failure is inevitable. Yet instead of having something to fall back on, he said, graduates should "fall forward" - learn from their mistakes and keep going.
Thomas Edison had countless failed experiments before succeeding with the light bulb, he said.
"Do you have the guts to fail?" Washington said. "If you don't fail, you're not even trying."
One of his earliest failures was as a pre-med student at Fordham University in New York, he said. He changed to pre-law, then journalism, and was close to flunking out before switching to drama and getting his degree.
Washington described a second failure about 30 years ago at a miserable tryout for a Broadway musical. Then last year, on the same stage as that audition, Washington won a Tony award for his work in "Fences."
The speech resonated with new grad Adam Shore, a 21-year-old physics major from the Philadelphia suburb of Dresher, Pa.
"No one ever tells a graduating class, `You're going to fail.' But it was very important for everyone to hear that," Shore said. "You can't go ... thinking you're going to succeed in every way. You have to be realistic."
Washington also teased the crowd at Franklin Field by alluding to Hollywood gossip, such as alleged arguments with Russell Crowe on the set of "American Gangster" and an encounter with a partially clothed Angelina Jolie in her dressing room. Washington and Jolie co-starred in "The Bone Collector."
But then he demurred.
"You're a group of high-minded intellectuals," he said, tongue-in-cheek. "You're not interested in that."
Washington endeared himself to some students by peppering the speech with references to favorite local hangouts. His son Malcolm just finished his sophomore year on campus, and Washington often traveled to see him play on Penn's basketball team.
"The coach didn't give him enough playing time," Washington said, drawing laughs. "We'll talk about that later."
Washington received an honorary doctorate at the ceremony. In granting the degree, Penn President Amy Gutmann said that his moving performances have "entertained us, inspired us and often enlightened us." She also praised his off-screen work with charities and social causes, including the Boys & Girls Clubs of America.
Other honorary degree recipients included author Joyce Carol Oates, husband-and-wife journalists Nicholas Kristof and Sheryl WuDunn, cellphone entrepreneur Mo Ibrahim, Nobel laureate Ei-ichi Negishi and sociology scholar Renee C. Fox.