Thistle started the brightest and on only four minutes Stephen McConalogue combined with Mark Roberts and his 12-yard shot was well saved by Paul Mathers.
Peterhead took some time to settle and their first chance came following a mix-up between Kenny Arthur and Grant Murray in the Thistle defence, but Allan Youngson's 25-yard lob was brilliantly cleared off the line by Scott Boyd.
As the game progressed both sides had chances to take the lead with Adam Strachan coming close on 24 minutes for the home side and Robert Linn shooting just the wrong side of the far post after 28 minutes for the visitors.
Thistle did manage to take the lead on 35 minutes when good play from Roberts allowed him to cross deep into the box and Billy Gibson out-jumped his marker to powerfully head home from eight yards.
The second half began with Thistle still in the ascendancy and they almost doubled their lead on 54 minutes when a Roberts chip from 14 yards was deflected for a corner and from this corner Boyd headed goalbound but Mathers was equal to it and saved well.
Peterhead began to play their way into the game and deservedly equalised on 59 minutes when, following a Chris Hegarty cross, Graeme Sharp nipped in front of Arthur and prodded into the empty net.
The Thistle keeper protested vehemently that he had been impeded but the referee allowed the goal to stand.
On 62 minutes there could have been a goal at either end when firstly McConalogue turned and shot from 14 yards but his effort was brilliantly saved by Mathers, and when the ball was cleared, Linn out-paced the Thistle defenders but shot wide with only the keeper to beat.
With both sides apparently playing for a draw, Peterhead took the lead with six minutes left when substitute Martin Bavidge beat three Thistle defenders and then fired an unstoppable shot low into the far corner.
Thistle were unable to pull back to level terms and now face an uphill struggle to secure First Division football for next season.