Following the House of Lords Act 1999, which removed the automatic right of hereditary peers to sit in the House of Lords, Carrington was created a life peer as Baron Carington of Upton.
Having trained at the Royal Military College, Sandhurst, Carrington was commissioned into the Grenadier Guards as a second lieutenant on 26 January 1939. He served with the regiment during the Second World War, promoted to lieutenant on 1 January 1941, and later temporary captain and acting major. Captain Lord Carrington played a key role as a tank commander during Operation Market Garden in the Netherlands in 1944; he led the first group of four Sherman tanks to reach the other side of the Nijmegen railway bridge across the Waal River. He was awarded the Military Cross (MC) on 1 March 1945 "in recognition of gallant and distinguished services in North West Europe". After the war, Carrington remained in the army until 1949.
In 1938, Carrington succeeded his father as 6th Baron Carrington. Although he became eligible to take his seat in the House of Lords on his 21st birthday in 1940, he was on active service at the time, and did not do so until 9 October 1945. After leaving the Army, he became involved in politics and served in the Conservative governments of Winston Churchill and Anthony Eden as Parliamentary secretary to the Minister of Agriculture and Food from November 1951 to October 1954. During the Crichel Down affair, which led to the resignation of Minister Thomas Dugdale, Carrington tendered his resignation, which was refused by the Prime Minister. Carrington then became Parliamentary Secretary to the Minister of Defence from October 1954 to October 1956. The latter year he was appointed High Commissioner to Australia, a post he held until October 1959. He was also appointed a Deputy lieutenant of Buckinghamshire on 2 July 1951. He became a Privy Counsellor in 1959.
Following his return to Britain he served under Harold Macmillan as First Lord of the Admiralty until October 1963. These were the years of the Royal Navy's Indian summer, and Carrington completed his education in high level defence, largely playing a secondary role, with former CNS Lord Mountbatten, 'Burma' to even other Sea Lords, as the last Royal CDS achieving the restoration of the Royal Navy to equal status with the Army and RAF, and securing major ship orders with guided missile destroyers replacing cruisers, and a large new nuclear submarine and Leander frigate building programme and interim retention of a large carrier programme. Carrington found Mountbatten impossibly vain and unrealistic in his pretensions, but thought that aircraft carriers and an amphibious task force allowing flexible intervention, and crucially easier withdrawal, than land forces, a better idea than the RAF 'island-hopping' alternative, believing that the Island bases would probably all have declared independence by 1975. The unrealistic nature of Mountbatten's large CVA01 carrier programme and Harold Macmillan's replacement as Prime Minister by Alec Douglas-Home, saw Carrington settle for Minister without Portfolio and Leader of the House of Lords under Douglas-Home until October 1964, when the Conservatives fell from power. From 1964 to 1970 he was Leader of the Opposition in the House of Lords.
When the Conservatives returned to power in 1970 under Edward Heath, Carrington became Defence Secretary, where he remained until 1974 when the Conservatives were voted out in favour of Harold Wilson's Labour. In a 1977 letter discussing the policy of torture of Irish republican internees during Operation Demetrius in August 1971, the then Home Secretary Merlyn Rees attributed the origins of the policy in particular to Carrington: '"It is my view (confirmed by Brian Faulkner before his death [NI's prime minister at the time]) that the decision to use methods of torture in Northern Ireland in 1971/72 was taken by ministers – in particular Lord Carrington, then secretary of state for defence."
Carrington had become Shadow Defence Secretary in 1968 after Enoch Powell was dismissed from the position following his controversial Rivers of Blood speech on immigration. He also served as Chairman of the Conservative Party from 1972 to 1974, and was briefly Secretary of State for Energy from January to March 1974.
Carrington was again Leader of the Opposition in the House of Lords from 1974 to 1979. In 1979 he was made Foreign Secretary and Minister for Overseas Development as part of the first Cabinet of Margaret Thatcher. Thatcher spoke very highly of Carrington, stating that "Peter had great panache and the ability to identify immediately the main points in any argument; and he could express himself in pungent terms. We had disagreements, but there were never any hard feelings."
Carrington chaired the Lancaster House conference in 1979, attended by Ian Smith, Abel Muzorewa, Robert Mugabe, Joshua Nkomo and Josiah Tongogara, which brought to an end Rhodesia's Bush War. He later expressed his support for Mugabe over Smith.
Carrington was Foreign Secretary when Argentina invaded the Falkland Islands on 2 April 1982. He resigned from the position on 5 April, taking full responsibility for the complacency of the Foreign and Commonwealth Office in its failure to foresee this development and for the misleading signals sent by the Foreign Office on British intentions for retaining control over the Falklands. In her autobiography, Margaret Thatcher was later to express her sorrow at his departure. She had asked him to stay but he left because he and the Foreign Office were distrusted and even hated by many back-bench Conservatives, and in turn he despised the party for its pettiness. Since his resignation, no other member of the House of Lords has held any of the four Great Offices of State.