He was born in Woking, Surrey, and was apprenticed to his uncle who ran a building firm in London. When the uncle died in 1830, Peto and his cousin Thomas Grissell went into partnership. The firm of Peto & Grissell built many well-known London buildings, including the Reform Club, the Oxford & Cambridge Club, the Lyceum and St. James' Theatre, as well as Nelson's column and the London brick sewer.
In 1846, the partnership broke up, and Peto entered into partnership with Edward Betts. Between 1846 and 1855, the firm carried out many large railway contracts both home and abroad, among them the South-Eastern Line, The London Chatham & Dover lines, the London Tilbury & Southend line, and the Grand Trunk Railway of Canada.
Peto became a Liberal Member of Parliament in 1847. However, he became involved in the financial crisis of 1866, was declared bankrupt and had to give up his seat in Parliament, despite having the support of both Benjamin Disraeli and William Gladstone.
Peto had bought Somerleyton Hall in Suffolk in 1843. He re-built the Hall and constructed a school and more houses in the village, before turning his attention to Lowestoft. He built a railway to connect the town to the rest of the rail network, as well as a harbour for 1,000 ships and some luxury hotels for the burgeoning holiday trade.