Peugeot began its reign in motorsports since the very beginning with the entering five cars for the Paris-Rouen Trials in 1894. These motorsport trials are largely recognized as the first motor sports competition. It was not until 1912 that Peugeot made its most notable contribution to the world of motor sports when one of the entered cars won the French Grand Prix. This winning Peugeot car was advanced and influential for later designs as the Peugeot featured a dual overhead cam configuration with four valves per cylinder. The Peugeot innovation made it such that the engines could be smaller and kick out maximum horsepower versus relying on larger heavier engines to get the desired horsepower.

1913 marked an excellent year for Peugeot in racing as they won the Indianapolis 500 and the French Grand Prix. Interestingly enough, when one of the Peugeot racers remained in the US during WWI, parts could not be acquired from France for the 1914 season. The owner of the car, Bob Burma, had the Peugeot serviced under the mechanic, Fred Offenhauser. The familiarity with the Peugeot engine was the basis of the Miller racing engine which led to the Offy racing engine.

The racing team had a great deal of success with the Peugeot 504 and the four wheel drive turbo charged 205 model. The 205 model is by far the best selling Peugeot model of all time, with the discontinuation of the model happening in the near future. The Peugeot 206 rally car enjoyed successes in championships beating the well known Subaru Impreza. The 206 was retired from rally racing after being nearly unbeatable during its reign as a racing force. The 206 was replaced in rally racing with the 307, which is nowhere near what the 206 established. In the races, transmission troubles gave the car poor results, which made it a far cry from the 206.

In the 1990s, the Peugeot 406 saloon was largely referred to as a sedan in many countries. The Peugeot 406 competed in the touring car championships worldwide with success in France, Germany and Australia. The mid-1990s were characteristic of the 406 losing popularity because of lackluster performance in racing. The lack of success was largely based on suspension problems, and the Peugeot 406 earned a poor reputation. After the fact, the Peugeot 406 was declared to be underpowered and the team was underfunded. Had the Peugeot team been better funded, the Peugeot 406 could have a better standing reputation today. In 2001, Peugeot entered three 406 models in to the British touring car championship to compete with Vauxhall Astra coupes. The Peugeot 406 was at the end of its production life cycle and was not competitive with the newer, more technologically advanced vehicles in the race. The Peugeot 307 replaced the 406, with the 307 having lackluster success as well. In all reality, had Peugeot stuck with the 206, they might still have a dominant rally racing prowess.