Petersen started out in show business at the age of ten when he became a "Mouseketeer" on the Mickey Mouse Club. He was fired within seven weeks for disorderly conduct. He was later quoted as saying, "I didn't have any idea that kid actors aren't supposed to be children." He also appeared as one of the children in the 1958 movie Houseboat with Sophia Loren and Cary Grant. However, he achieved stardom as a teenage heartthrob on The Donna Reed Show, an ABC family sitcom that ran from 1958 to 1966. He played son Jeff Stone from the time he was twelve until he was twenty. In addition, he learned a great deal from Reed while he was growing up on the television set. Above all, he realized that Donna was his favorite actress. Petersen sang his sentimental hit song "My Dad" to costar Carl Betz, who portrayed Dr. Alex Stone, in a 1962 episode of the series. His other costars were Shelley Fabares and his sister Patty Petersen as well as Bob Crane.

He went on to act in many guest-roles, including one as a military officer in the short-lived 1967 ABC western series Custer, with Wayne Maunder in the title role. As the years passed, the television appearances grew increasingly infrequent. Petersen said that too many casting directors do not permit bubblegum stars to grow into adult actors.

Petersen's fame brought recording offers and although his singing voice was limited, he had hit record singles with songs "She Can't Find Her Keys", "Amy", and "Lollipops and Roses", as well as "My Dad" that made #6 on the Billboard Hot 100. He also recorded during the 1960s for Motown, including the singles "Chained" (later a hit for Marvin Gaye) and "A Little Bit For Sandy."

Difficult times followed his disappearance from the Hollywood spotlight. As a result, Petersen returned to the university and obtained a degree in literature that helped him to write sixteen adventure novels.

Petersen's authorship began after he met David Oliphant, a New York publisher visiting Los Angeles. His first novel concerned car racing. Thereafter, he created a Matt Helm-type hero, Eric Saveman, also known as "The Smuggler." In one year, Pocket Books published eight of his Smuggler novels, earning Petersen $75,000.

In 1977 Petersen's autobiography, Walt, Mickey and Me: Confessions of the First Ex-Mouseketeer, was published.

In 1990, following the suicide of former child star Rusty Hamer, Petersen founded a child-actor support group, A Minor Consideration, to improve working conditions for child actors and to assist in the transition between working as a child actor and adult life, whether in acting or in other professions. In July 2009, he successfully petitioned a California court to appoint a law guardian to oversee the earnings of the widely-publicized octuplets born to "octomom" Nadya Suleman.

He is currently the board member of the Donna Reed Foundation, and works for the Donna Reed Festival, which takes place on the third week of June, every year, in his mentor's hometown of Denison, Iowa. He also currently serves on the member-elected board of directors of the American Federation of Television and Radio Artists (AFTRA), a national media performers AFL-CIO union based in Los Angeles, CA.