Peter Sedgwick grew up in Liverpool, and won a scholarship to Balliol College, Oxford, where he became a member of the Communist Party of Great Britain. In 1956, after the Hungarian Revolution he left and joined the Socialist Review Group, later the International Socialists (forerunner to the Socialist Workers Party) He wrote for the group’s press whilst also involved in the activities of rank-and-file members. He was opposed to the International Socialism group's renaming itself as the Socialist Workers Party in 1976, refusing to join the new organisation while always remaining a man dedicated to the far left. (Christopher Hitchens called him "a noble remnant of the libertarian left" and dedicated his book 'Letters To A Young Contrarian' to him.)

Peter Sedgwick wrote a book on psychiatry called PsychoPolitics. In many respects this book predicted and explained the severe Thatcher/Reagan—era reductions in USA and UK National Health Service psychiatric services, especially in the number of NHS beds for the mentally ill which were reduced by 80,000 in the UK during the 1980s[1]. Peter Sedgwick identified that "politically correct" conceptions of mental illness, such as those of the anti-psychiatry writers Michel Foucault, R.D. Laing and Thomas Szasz, could be exploited by the right wing to reduce services. His ideas have not been forgotten and Night Peter at Psychopolitics.net has developed a psychopolitics web site which reinterprets Peter Sedgwick's ideas in a marxist and situationist context.

Peter Sedgwick was found dead in a canal in Northern England. Suicide was suspected. He was editing the works of Victor Serge at the time of his death.