Pedersen started his career playing for Storsteinnes IL, before going to the Danish club Brøndby IF in 1990.

After a year at Rosenborg, he made a third and final attempt at establishing a career as a foreign professional, going to Belgian side Gent.

Pedersen was during his playing career heavily linked to both Liverpool and Newcastle United.

During Tromsø's last home match of the 2006 season, Pedersen sustained an injury which would eventually lead him to retire from football.

He officially announced that he retired in August 2007, and was honored during a special ceremony before the home match against Odd Grenland on 2 September 2007.