Upon receiving his bachelor's degree from Cal Poly, Peterson joined NASA in August 1960 as an engineer at the Dryden Flight Research Center.

As a NASA research pilot, he flew a wide variety of airplanes, including the F5D-1, F-100, F-104, F-111A, B-52, NT-33A Variable Stability Trainer, the wingless lifting bodies and numerous general aviation aircraft as well as several types of helicopters and sailplanes.

On May 10, 1967, during the sixteenth glide flight of a lifting body Northrop M2-F2, a landing accident severely damaged the vehicle and seriously injured Peterson.

Portions of M2-F2 footage including Peterson's spectacular crash landing were used for the 1973 TV movie and subsequent series, The Six Million Dollar Man during the opening credits of every episode.

He then joined the Northrop Corporation, where he assumed responsibility for safety and quality assurance for testing the B-2 Advanced Technology Bomber.