Throughout her Royal Navy career Peony escorted convoys: primarily in home waters, but sometimes in the Mediterranean Sea and to Freetown in Sierra Leone.

From late 1940 to early 1941 she was part of the 10th Corvette Group, Mediterranean Fleet based at Alexandria, with which she escorted numerous convoys to Malta.

In December 1941 while escorting Mediterranean convoy AT-6 from Alexandria to Tobruk, the German submarine U-559 torpedoed the Polish steamer Warszawa and attacked Peony.

In the small hours of 24 December 1941 U-568 torpedoed and sank a sister ship, HMS Salvia, about 100 nautical miles (190 km) west of Alexandria.

In 1947 the United States in what became known as the Truman Doctrine declared its support the Greek government in its war against Communist guerrillas.