After a sterling junior career with the Portland Winter Hawks, Peterson was selected in the first round, 12th overall, of the 1978 NHL Amateur Draft by the Detroit Red Wings. He made Detroit's NHL squad in his first training camp, but unfortunately saw his season end after only 5 games due to a broken leg. Recovering from his injury, he spent most of the 1979–80 season in the minors, although he saw 18 games in a Detroit uniform and scored his first NHL goal. In 1980–81, he established himself as an NHL regular, registering 6 goals and 24 points in 53 games.