Peterson, or MP as he was better known, died from a suspected heart attack at his Coolangatta home. He was 59.
Before 11-time world champion Kelly Slater came along, Peterson was regarded as the great surfer ever. He was just about unbeatable in the early 1970s, winning most of the world's major events including the famed Bells Beach Classic three times.
His trademark manoeuvre - a savage, sweeping turn dubbed the 'MP cutback' - was immortalized in the classic surf film Morning of the Earth.
But his career hit the rocks due to the combined effects of drug addiction and paranoid schizophrenia.
After numerous drug busts, he ended up in Boggo Road jail, in 1983, after being chased by what he thought were Martians. In fact, it was a posse of police.
A roadblock of 15 police cars had to be set up on the Story Bridge to stop his 1966 Falcon after a chase in which 120km/h speeds were clocked.
Peterson gave up surfing and lived with his mother Joan on the southern Gold Coast, but remains a revered figure in the sport.
"He was a legend to me," Slater said on Twitter yesterday.