A lifelong Indianapolis resident, Peterson graduated from North Central High School before attending Purdue University.
A Democrat first elected in 1999, he was defeated in 2007 in a bid for a third term in what was widely viewed as a huge upset. Peterson announced his candidacy for mayor of Indianapolis in 1999 and defeated the Republican candidate, Indiana Secretary of State Sue Anne Gilroy, 52 percent to 41 percent. When Peterson took office in 2000, he became Indianapolis's first Democratic mayor since 1967.
Peterson was re-elected in 2003 with 63 percent of the vote, handily defeating Republican Marion County Treasurer Greg Jordan. During his second term, he led the efforts to consolidate city and county government, merging the Indianapolis Police Department with the Marion County Sheriff's Department to form the Indianapolis Metropolitan Police Department under the leadership of Marion County Sheriff Frank J. Anderson, and merging several township fire departments with the Indianapolis Fire Department. He also oversaw plans to construct a new home for the Indianapolis Colts while also expanding the Indiana Convention Center.
Peterson is also credited for attracting additional downtown development including the construction of a downtown Simon Property Group headquarters and Conrad Hotel tower. Peterson was expected to easily cruise to re-election in 2007 as no well-known Republican candidates entered the race, leaving relatively unknown political newcomer Greg Ballard as his opposition. Indeed, many thought that the once-dominant Republican Party was all but dead in the city.
However, largely due to high property taxes and a rising crime rate, several polls rated the race about even as election day approached. When voters went to the polls, Peterson lost to Ballard by a margin of 51 percent to 47 percent. Prior to the election, both Democrats and Republicans considered Peterson a political star, and he had been mentioned as a candidate for governor or the United States Senate.
Now a "fallen star", the loss prompted many pundits to declare it the biggest political upset in Indiana history. In December 2007, Peterson was mentioned as a possible candidate in the special election to fill the seat of recently deceased Congresswoman Julia Carson. A few days later, Peterson ruled out a run for this office.
Harvard University's Institute of Politics hired Peterson as a resident fellow in January 2008. At Harvard he led study groups on urban politics that he confronted in his time as mayor, including building arts communities, education reform, sports facilities, and homelessness. Living Cities, a national philanthropic organization that conducts research and advocates on behalf of cities, selected Peterson as one of its first two Distinguished Urban Fellows in March 2008.
Peterson remains involved in community activities in Indianapolis, particularly as the Chair of the Board of Directors for The Mind Trust, a nonprofit organization he founded in 2006 with his former charter schools director David Harris to promote entrepreneurship in education. In June 2009, Peterson joined Eli Lilly and Company as senior vice president of corporate affairs and communications. This is the same position Indiana Governor Mitch Daniels previously held.
Board member Indiana Nature Conservancy, Regenstrief Foundation.
Married Amy Minick Peterson. 1 child Meg.