Preston

Following his retirement as player, Peters took on roles as assistant manager at Fulham, Cambridge and Preston North End. After the departure of John Beck in late 1993–94, Peters was promoted to manager at Preston, who at the time were third from bottom of Division Three. Under Beck, Preston had played the long-ball system, but with Peters in charge the team played a more attractive passing game. He also changed their fortunes, as Preston won promotion to Division Two in 1996. During his time at Preston, Peters brought in players such as David Beckham (on loan) and Jon Macken. In 1997, he sold Kevin Kilbane for a club record fee of £1.2m. Jon Macken would eventually be sold by the club for another record, £5m, after scoring more than 70 goals for the club.

In early 1998, with Preston sinking back towards Division Three, and having finished fifteenth two years running, Peters resigned and David Moyes was promoted to become their new manager. A month later, after considering his future, Peters rejoined Preston as the club's Centre of Excellence Manager. He set about developing the club's Centre of Excellence, nurturing the talents of local 9- to 16-year-olds. Recent graduates of the Preston academy include Paul McKenna and Andrew Lonergan. But with the Centre of Excellence ticking over, Preston chose to make Peters redundant, in a cost-cutting measure.

Exeter City

Exeter City quickly secured his services and issued him with the challenge, with just 13 matches of the 2002–03 season remaining, of preserving their league status. Peters lost this challenge, but Exeter lost only three of those 13 games. With the club in financial turmoil, the chairman and vice-chairman both resigned after they had been arrested as part of an investigation of club finances. Possibly facing a large points penalty for going into administration, having to release a large number of the playing staff and being unable to sign any new players, Peters resigned four days later. Peters joined Everton, where David Moyes was now manager, as a scout.

Shrewsbury Town

On 15 November 2004, Peters took over the reins at Shrewsbury Town. The club had been promoted out of the Football Conference in the summer of 2004 under Jimmy Quinn but were struggling in the newly titled "League Two", and had been knocked out of the FA Cup by non-league Histon.^[3]

Peters appointed the much-travelled Mick Wadsworth as his assistant in January 2005, and Shrewsbury finished 21st out of 24 that season, 11 points above the relegated Kidderminster. Going into the 2005–06 season, Shrewsbury were favourites for relegation, and after a poor start to the season it looked a likelihood. But Peters turned Shrewsbury's fortunes upwards, with the club even knocking Football League Championship club Brighton out of the League Cup^[4] and taking Sheffield United, also of the Championship, to a penalty shootout in the same competition.^[5] Towards the end of the season, a consistently good run of results gave Town a chance of reaching the play-offs, though the club eventually finishing tenth.

Despite being linked with the vacant managerial post at League One Tranmere Rovers, Peters agreed a two-year extension to his contract on 17 May 2006, which now ran until the end of the 2008–09 season. He finished the 2006–07 season by taking Shrewsbury to the play-off final at the new Wembley Stadium, after knocking out the highly fancied Milton Keynes Dons. However, Town lost 3–1 to Bristol Rovers in the final, ensuring another season in the fourth tier.

The 2007–08 season saw Peters managing the club at its new home, New Meadow. However, the new location failed to bring a positive effect on the field as the club faltered after a bright start. On 3 March 2008, after collecting just 6 points from 12 matches, Peters parted company with the club by mutual consent. His final game had been a 4–1 defeat at Barnet and was less than a season after a Wembley appearance.^[6]

On 4 October 2011, Peters was appointed Director of Football at League Two club Hereford United, a local rival of Shrewsbury.^[7] He left the club on 29 October 2012 after his role was made redundant following their relegation.^[8]