Moon was born on the island of Oʻahu in 1944. From the late 1950s through the 1960s, he gained musical inspiration, insight, and knowledge; playing as a Maile Serenader with Gabby "Pops" Pahinui in the 1960s. Later, in the 1970s, he also served as Gabby's manager. Soon after, Moon became a founding member of The Sunday Manoa, along with Palani Vaughn, Albert "Baby" Kalima Jr., and Cyril Pahinui (one of Gabby's sons). After Vaughan and Cyril left the group, Moon released another album (Hawaiian Time) with Kalima and Cyril's older brother, "Bla" Pahinui. Kalima and Pahinui also left, leaving Moon the only member of the original band.  Moon then recruited Robert and Roland Cazimero to revive the group. In 1971, their first album, Guava Jam was released and became seen as the spark of the Hawaiian Cultural Renaissance. Two more albums were released by the band.

After the breakup of The Sunday Manoa, the Cazimeros continued as the Brothers Cazimero. In 1979, with his new group, The Peter Moon Band, released the album Tropical Storm, which garnered four Na Hoku Hanohano Awards. In 1983, Moon released Cane Fire, which earned six Na Hoku Hanohano awards; earning an unprecedented seventh award with a Sunday Manoa anthology album. The band was extremely popular, with an unmatched stylistic range that ran from Hawaiian to reggae to samba, jazz, and swing. Throughout the 1980s, The Peter Moon Band remained a staple of the Hawaiian music scene winning a third Na Hoku Hanohano award for album of the year with Black Orchid in 1988. The "PMB" also met great success from tours in Japan. During those years there were many changes in the band's membership. Listed in no particular order the complete list of the musicians who worked with Moon as members of the group are Bobby Hall, Steven Hall, Martin Pahinui, Cyril Pahinui, Randy Lorenzo, Merv Ching, Milt Holland, Mark Yim, Dwight Kanae, Ocean Kaowili, David Choy, and Steve Wofford.

In the mid-1990s, Moon started producing instrumental albums which led to his first ʻukulele instructional video, The Magic of the Ukulele. Moon was active in other facets of the music business in Hawaiʻi, starting his own record label and distributing company, as well as producing and promoting two annual festivals. In 1970 he and Ron Rosha co-founders of the Kanikapila (Hawaiian for "let's play music") festival, a celebration of Hawaiian music and dance, at the University of Hawaii - Manoa, introducing college students and other young people to many of the greats in Hawaiian music.

Kanikapila remained an annual event for 25 years, then was revived briefly in 2002 as Kalakoa Jam. Later, he produced the Blue Hawaiian Moonlight concerts at the Waikiki Shell, featuring prominent names in Hawaiian music. Peter Moon was inducted into the Hawaiian Music Hall of Fame in 2007.