This church probably stands on the site of an early Saxon church, though there is no known record of this, and even Domesday does not mention a church in Sandwich. The Normans, who first built the churches of St. Clement's and St. Mary's, probably rebuilt St. Peter's also, as some Norman stones can still be seen at the west end of the nave. It is believed that this church was destroyed during the French attack in 1216 as it was completely rebuilt by Carmelite monks from Normandy soon afterwards. The aisles were originally lean-to, but were widened in the 14th century, when the north porch was also added, this explains the interior clerestory windows over the north arcade. The central tower suddenly collapsed at 11.15 pm on the evening of Sunday, October 13th, 1661, after several services had been held in the church during the day. Much damage was done, the south aisle being completely destroyed. The church was repaired by Dutch refugees who were allowed to use the building for services.

Note the Dutch bricks of the tower, surmounted by a cupola, and the roof and brick gable of the small stone building adjoining the church at the south-east corner which was repaired at the same time. This small building is of exceptional interest, and consists of an upper hall over a vaulted undercroft, supported by twin octagonal pillars. This was built in the early 14th century, probably to house the priests of the Ellis Chantry which was in the church, and has been used for a variety of purposes since. The stone staircase which connected the hall with the undercroft in part remains, and can be seen through a modern window from the churchyard. The curfew is rung nightly here. In the churchyard has been re-erected a window from the chapel of St. Thomas' Hospital. Facing on to Market Street and adjoining the church is a fine war memorial by Omar Ramsden.

The church is now employed as a Brass Rubbing Centre and a venue for events and exhibitions.