Cook was born at his parents' house, "Shearbridge", in Middle Warberry Road, Torquay, Devon. He was the only son and eldest of the three children of Alexander Edward "Alec" Cook (1906–1984), a colonial civil servant, and his wife Ethel Catherine Margaret, née Mayo (1908–1994). He was educated at Radley College and Pembroke College, Cambridge, where he studied French and German.

The 1960s satire boom was coming to an end and Cook said: "England was about to sink giggling into the sea". He complained that Frost's success was based on copying Cook's own stage persona and Cook dubbed him "the bubonic plagiarist", and said that his only regret in life, according to Alan Bennett, had been saving Frost from drowning. This incident occurred in the summer of 1963, when the rivalry between the two men was at its height. Cook had realised that Frost's potential drowning would have looked deliberate if he had not been rescued.

In 1961, Cook opened The Establishment, a club at 18 Greek Street in Soho in central London, presenting fellow comedians in a nightclub setting, including American Lenny Bruce. Cook said it was a satirical venue modelled on "those wonderful Berlin cabarets ... which did so much to stop the rise of Hitler and prevent the outbreak of the Second World War"; as a members-only venue it was outside the censorship restrictions.

In 1962, the BBC commissioned a pilot for a television series of satirical sketches based on the Establishment Club, but it was not immediately picked up and Cook went to New York City for a year to perform Beyond The Fringe on Broadway. When he returned, the pilot had been refashioned as That Was the Week That Was and had made a star of David Frost, something Cook resented.

Around this time, Cook provided financial backing for the satirical magazine Private Eye, supporting it through difficult periods, particularly in libel trials. Cook invested his own money and solicited investment from his friends. For a time, the magazine was produced from the premises of the Establishment Club. In 1963, Cook married Wendy Snowden; the couple had two daughters, Lucy and Daisy, but the marriage ended in 1970.

Cook's comedy partnership with Dudley Moore led to Not Only... But Also. This was originally intended by the BBC as a vehicle for Moore's music, but Moore invited Cook to write sketches and appear with him. Using few props, they created dry, absurd television that proved hugely popular and lasted for three series between 1965 and 1970. Cook played characters such as Sir Arthur Streeb-Greebling and the two men created their Pete and Dud alter egos. Other sketches included "Superthunderstingcar", a parody of the Gerry Anderson marionette TV shows, and Cook's pastiche of 1960s trendy arts documentaries – satirised in a parodic segment on Greta Garbo.

With The Wrong Box (1966) and Bedazzled (1967) Cook and Moore began to act in films together. Directed by Stanley Donen, the underlying story of Bedazzled is credited to Cook and Moore and its screenplay to Cook. A comic parody of Faust, it stars Cook as George Spigott (the Devil) who tempts Stanley Moon (Moore), a frustrated, short-order chef, with the promise of gaining his heart's Desire – the unattainable beauty and waitress at his cafe, Margaret Spencer (Eleanor Bron) – in exchange for his soul, but repeatedly tricks him. The film features cameo appearances by Barry Humphries as Envy and Raquel Welch as Lust. Moore composed the Soundtrack music and co-wrote (with Cook) the songs performed in the film. His jazz trio backed Cook on the theme, a parodic anti-love song, which Cook delivered in a deadpan monotone and included his familiar put-down, "you fill me with inertia."

In 1968, Cook and Moore briefly switched to ATV for four one-hour programmes entitled Goodbye Again, based on the Pete and Dud characters. Cook's increasing alcoholism led him to become reliant on cue cards and the show was not a popular success, owing in part to the publication of the ITV listings magazine, TV Times, being suspended because of a strike. John Cleese was a cast member.

In 1970, Cook took over a project initiated by David Frost for a satirical film about an opinion pollster who rises to become President of Great Britain. Under Cook's guidance, the character became modelled on Frost. The film, The Rise and Rise of Michael Rimmer, was not a success, although the cast contained notable names (including appearances from Monty Python's John Cleese and Graham Chapman, who co-wrote the film).

Cook became a favourite of the chat show circuit but his own effort at hosting one for the BBC in 1971, Where Do I Sit?, was said by the critics to have been a disappointment. He was replaced after only two episodes by Michael Parkinson, the start of Parkinson's career as a chat show host. Parkinson later asked Cook what his ambitions were, Cook replied jocularly "[...] in fact, my ambition is to shut you up altogether you see!"

Cook and Moore fashioned sketches from Not Only....But Also and Goodbye Again with new material into the stage revue called Behind the Fridge. This show toured Australia in 1972 before transferring to New York City in 1973, re-titled as Good Evening. Cook frequently appeared on and off stage the worse for drink. Nonetheless, the show proved very popular and it won Tony and Grammy Awards. When it finished, Moore stayed in the United States to pursue his film acting ambitions in Hollywood. Cook returned to Britain and in 1973 married the Actress and model Judy Huxtable.

Cook and Moore hosted Saturday Night Live on 24 January 1976 during the show's first season. They did a number of their classic stage routines, including "One Leg Too Few" and "Frog and Peach" among others, in addition to participating in some skits with the show's ensemble cast.

Cook played multiple roles on the 1977 concept album Consequences, written and produced by former 10cc members Kevin Godley and Lol Creme. A mixture of spoken comedy and progressive rock with an environmental subtext, Consequences started as a single that Godley and Creme planned to make to demonstrate their invention, an electric guitar effect called the Gizmo, which they developed in 10cc. The project grew into a triple LP boxed set. The comedy sections were originally intended to be performed by a cast including Spike Milligan and Peter Ustinov, but Godley and Creme eventually settled on Cook once they realised he could perform most parts himself.

In 1978, Cook appeared on the British music series Revolver as the manager of a ballroom where emerging punk and new wave acts played. For some groups, these were their first appearances on television. Cook's acerbic commentary was a distinctive aspect of the programme.

In June 1979, Cook performed all four nights of The Secret Policeman's Ball – teaming with John Cleese. Cook performed a couple of solo pieces and a Sketch with Eleanor Bron. He also led the ensemble in the finale – the "End of the World" Sketch from Beyond The Fringe.

In 1980, partly spurred by Moore's growing film star status, Cook moved to Hollywood and appeared as an uptight English butler to a wealthy American woman in a short-lived United States television sitcom, The Two of Us, also making cameo appearances in a couple of undistinguished films. In 1980, Cook starred in the LWT special Peter Cook & Co. The show included comedy sketches, including a Tales of the Unexpected parody "Tales of the Much As We Expected." This involved Cook as Roald Dahl, explaining his name had been Ronald before he dropped the "n." The cast included John Cleese, Rowan Atkinson, Beryl Reid, Paula Wilcox and Terry Jones.

Although unable to take part in the 1981 gala, Cook supplied the narration over the animated opening title sequence of the 1982 film of the show. With Lewis, he wrote and voiced radio commercials to advertise the film in the UK. He also hosted a spoof film awards ceremony that was part of the world première of the film in London in March 1982.

In 1983 Cook played the role of Richard III in the first episode of Blackadder, "The Foretelling," which parodies Laurence Olivier's portrayal. He narrated the short film "Diplomatix" by Norwegian comedy trio Kirkvaag, Lystad and Mjøen, which won the "Special Prize of the City of Montreux" at the Montreux Comedy Festival in 1985. In 1986 he partnered Joan Rivers on her UK talk show. He appeared as Mr Jolly in 1987 in The Comic Strip Presents' episode "Mr. Jolly Lives Next Door," playing an Assassin who covers the sound of his murders by playing Tom Jones records. That same year, Cook made a big splash on American shores when he appeared in The Princess Bride as the "Impressive Clergyman" who officiates the wedding ceremony between Buttercup and Prince Humperdinck, uttering the now famous line "Mawage!" Also that year he spent time working with Martin Lewis on a political satire about the 1988 US presidential elections for HBO, but the script went unproduced. Lewis suggested Cook team with Moore for the US Comic Relief telethon for the homeless. The duo reunited and performed their "One Leg Too Few" Sketch.

Following Cook's 1987 stage reunion with Moore for the annual American benefit for the homeless, Comic Relief (not related to the UK Comic Relief benefits), Cook repeated the reunion for a British audience by performing with Moore at the 1989 Amnesty benefit The Secret Policeman's Biggest Ball.

In 1988, Cook appeared as a contestant on the improvisation comedy show Whose Line Is It Anyway? Cook was declared the winner, his prize being to read the credits in the style of a New York cab driver – a character he had portrayed in Peter Cook & Co.

In late 1989, Cook married for the third time, to Malaysian-born property developer Chiew Lin Chong (1945–2016) in Torbay, Devon. She provided him with some stability in his personal life and he reduced his drinking, to the extent that for a time he was teetotal. He lived alone in a small 18th-century house in Perrins Walk, Hampstead, while his wife kept her own property only 100 yards away.

On 17 December 1993, Cook appeared on Clive Anderson Talks Back as four characters – biscuit tester and alien abductee Norman House, football manager and motivational speaker Alan Latchley, judge Sir James Beauchamp and rock legend Eric Daley. The following day he appeared on BBC2 performing links for Arena's "Radio Night". He also appeared, on 26 December, in the 1993 Christmas special of One Foot in the Grave ("One Foot in the Algarve"), playing a muckraking tabloid Photographer. Before the end of the next year his mother died, and a grief-stricken Cook returned to heavy drinking. He made his last TV appearance on the show Pebble Mill at One in November 1994.

Dudley Moore attended Cook's memorial Service at St John-at-Hampstead on 1 May 1995. He and Martin Lewis presented a two-night memorial for Cook at The Improv in Los Angeles, on 15 and 16 November 1995, to mark what would have been Cook's 58th birthday.

Several friends honoured him with a dedication in the closing credits of Fierce Creatures (1997), a comedy film written by John Cleese about a zoo in peril of being closed. It starred Cleese, Jamie Lee Curtis, Kevin Kline and Michael Palin. The dedication displays photos and the lifespan dates of Cook and of British naturalist and humourist Gerald Durrell.

In 1999 the minor planet 20468 Peter Cook, in the main asteroid belt, was named after Cook.

Channel 4 broadcast Not Only But Always, a television film dramatising the relationship between Cook and Moore, with Rhys Ifans portraying Cook. At the 2005 Edinburgh Festival Fringe a play, Pete and Dud: Come Again written by Chris Bartlett and Nick Awde, examined the relationship from Moore's view. The play was transferred to London's West End at The Venue in 2006 and toured the UK the following year. Tom Goodman-Hill starred as Cook and Kevin Bishop as Moore in the West End.

A green plaque was unveiled by the Westminster City Council and the Heritage Foundation at the site of the Establishment Club on 15 February 2009 after an online campaign by satirist / event Organiser Mark Biddiss, who also organised "The World's 1st Peter Cook is dead Birthday Party/Long overdue Public Wake" at the site of the Establishment Club to promote the plaque, which featured a live reworking of 'Derek & Clive' material titled "Derek & Clive are Alive again".

In response to a barb in The Daily Telegraph that the show was recycled material, Cook wrote a satire of the summing-up by Mr Justice Cantley in the trial of former Liberal Party leader Jeremy Thorpe, a summary thought by some to show bias in favour of Thorpe. Cook performed it that same night (Friday 29 June – the third of the four nights) and the following night. The nine-minute opus, "Entirely a Matter for You", is considered by many fans and critics to be one of the finest works of Cook's career. Cook and show Producer Martin Lewis brought out an album on Virgin Records entitled Here Comes the Judge: Live of the live performance together with three studio tracks that further lampooned the Thorpe trial.

A historic blue plaque was unveiled by the Torbay Civic Society on 17 November 2014 at Cook's place of birth, "Shearbridge", Middle Warberry Road, Torquay, with his widow Lin and other members of the family in attendance. A further blue plaque was commissioned and erected at the home of his favourite football club, Torquay United, Plainmoor, Torquay, in 2015.