The Southern Hotel, situated at the block bounded by Fourth, Fifth, Walnut and Elm Streets, was a six-story luxury hotel that had over 300 guests on the tragic night of April 11, 1877. When fire broke out, a number of people became trapped on the upper floors, unable to escape the flames. O´Toole arrived on the scene aboard a "Skinner escape truck" (an early hook and ladder pulled by horses). Seeing people trapped above the reach of the longest ladder, O´Toole instructed them to lower bedsheets tied to bedposts in his direction. He then swung out on a rope, grabbed hold of the bed sheet and climbed up to the smoke-filled room. Next he lowered the individuals to safety below. While 21 people would die in the fire, O´Toole rescued 12 from certain death. Out of gratitude for his actions, the citizens of St. Louis awarded him a check for $500, an amount more than six times his monthly salary. O´Toole donated the money to help orphans and in his modesty he always down played the importance of his actions.

Toole again demonstrated his bravery at another fire at the St. Louis courthouse. From the courthouse dome, he dangled on a rope while extinguishing the fire through a hole he had chopped in the roof. He died on July 6, 1880, in a freak accident in which a fire extinguisher exploded and killed him while he was putting out a fire in a vacant house. More than 20,000 St. Louisans mourned his passing.

In keeping O´Toole´s memory alive, the St. Louis Fire Department has christened their Fire Marine Rescue Unit´s fireboat, the "Phelim O´Toole." O´Toole is buried at Calvary Cemetery.