Peterson was an all-state selection as junior and senior at Bingham High School in South Jordan, Utah. He holds the school's single-season record for passing yardage (2,011) and career record for passing yards (3,900). He totaled 38 touchdown passes including 20 in his senior season. He also played baseball and basketball. After high school, Peterson served a two-year Mormon mission in Nicaragua (August 1999–July 2001).
After starting the year as a backup, Peterson came on strong at the end of the season to win the starting quarterback job from Quinton Porter, leading the Eagles to wins in each of their last three games. He completed 16-of-25 passes for 224 yards and two touchdowns to lead the team to a 35–21 win over Colorado State in the Diamond Walnut San Francisco Bowl. He finished the season completing 84 of 147 passes for 1,124 yards, 10 touchdowns, and seven interceptions.
2004 season
Peterson won Big East Offensive Player of the Week twice, Big East Co-Offensive Player of the Week once, and Big East Offensive Player once. He started 10 games until missing the season finale due to a fractured second metacarpal in his right (throwing) hand late in the second quarter against Temple. Peterson came back to complete 24 of 33 passes for 236 yards and two touchdowns in BC's 37–24 win over North Carolina in the Continental Tire Bowl before exiting the game in the second half with a broken leg. However, he still earned game MVP honors. Megan, his wife, picked up his trophy on the field after the game. He finished the season with 2,594 passing yards, 18 touchdowns, and 10 interceptions.
Peterson concluded his career with 3,718 yards (eighth all time), 28 touchdowns (sixth all time), and a 60.8 completion percentage (sixth all time).
Peterson is the sixth of ten children. His older brother, Charlie, is a former BYU quarterback who played professionally in the Arena Football League (AFL) and Canadian Football League (CFL)