Peters went into the family hair styling Business on Rodeo Drive in Hollywood, where he made many film industry connections. Peters designed a short wig that Barbra Streisand wore for the comedy For Pete's Sake (1974), and the couple began a relationship. He produced Streisand's album Butterfly (1974) and gained a producing credit on Streisand's remake of A Star Is Born (1976), although the extent of his contribution has been disputed. He worked alongside Peter Guber for the next 10 years, with whom he headed Sony Pictures Entertainment for two years until he was ousted. The two men were the subject of the book Hit and Run: How Jon Peters and Peter Guber Took Sony for a Ride in Hollywood by Nancy Griffin and Kim Masters.

In the early 1990s, he bought the rights to the Superman film franchise from Warner Bros. In his Q&A/comedy DVD, An Evening With Kevin Smith, writer/director Kevin Smith related an anecdote about working for Peters when he was hired to write a script for a new Superman movie, then called Superman Reborn, and later renamed Superman Lives. According to Smith, Peters had expressed disdain for most of Superman's iconic characteristics by demanding that Superman was never to fly or appear in his trademark costume. He also suggested Sean Penn as being ideal for the role, based on his performance as a death row inmate in Dead Man Walking saying that Penn had the eyes of a "caged animal, a fucking killer." Peters then demanded that the third act of the film include a fight between Superman and a giant spider, to be unveiled in an homage to King Kong. Peters later produced the 1999 steampunk western Wild Wild West, the finale of which features a giant mechanical spider.

Jon Peters was a Producer for the adaptation of the Sandman comics for Warner Brothers, which met with controversy. One draft script commissioned by Peters was reviewed on the Internet at Ain't It Cool News, and was met with scorn. Sandman creator Neil Gaiman called the last screenplay that Warner Brothers would send him "...not only the worst Sandman script I've ever seen, but quite easily the worst script I've ever read." By 2001, the project had become stranded in development hell.

In a 2005 interview, Gaiman commented: "But Sandman movies, they just got increasingly appalling. It was really strange. They started out hiring some really good people and you got Elliott and Rossio and Roger Avary came in and did a draft. They were all solid scripts. And then Jon Peters fired all of them and got in some people who take orders, and who wanted fistfights and all this stuff. It had no sensibility and it was just...they were horrible."

He subsequently served as Producer for Superman Returns, the 2006 movie directed by Bryan Singer, and as an executive Producer for Man of Steel, the 2013 movie directed by Zack Snyder. Peters was banned from the Man of Steel set by Producer Christopher Nolan.

Nikke Finke's Deadline Hollywood blog reported on a book proposal for the autobiography of Jon Peters, written by him and Los Angeles Writer william Stadiem. Peters reportedly intended to write about his life with Streisand and a string of other Celebrity lovers. In 2009 he subsequently withdrew from the HarperCollins book deal after adverse publicity triggered by the leaking of the proposal and potential lawsuits.

In August 2011, a Los Angeles jury ordered Jon Peters to pay a former assistant $3.3 million after finding she was subjected to sexual harassment and a hostile work environment during the production of Superman Returns. The suit effectively ended his career. Since 2001, Peters has had only two credits; one for producing (2006) and one for executive producing (2013). The latter credit was for a project already underway before the suit ended.