Peterson was claimed by the Hartford Whalers in the waiver draft on the eve of the 1987–88 season, and would suffer through the worst year of his career with just 2 goals and 9 points in 52 games. He would rebound to have an improved year in 1988–89, registering 4 goals and 17 points in 66 games for the Whalers while anchoring the top penalty-kill unit alongside Dave Tippett. However, at the conclusion of the season he announced his retirement to accept a coaching position with the Whalers.