An early member of the Hitler Youth, in 1935 he attended a leadership course in Hitler's personal bodyguard; while he received favourable reviews from his instructors, psychological evaluation noted he was negative, egocentric, and flaunted his connections with Himmler, warning he might turn into a "difficult subordinate" or "arrogant superior". Peiper received his Nazi Party membership card on 1 March 1938, a fact he would deny or obfuscate after the war.

Peiper served as Himmler's adjutant from 1938–41 and was considered one of his favourites; the two continued correspondence throughout the war, with Himmler addressing him "my dear Jochen". He was a first-hand witness to emerging policies of deportation and ethnic cleansing, including summary executions, gassing of psychiatric patients, and tours of German concentration camps and Nazi-imposed ghettos. Peiper was present for a June 1941 conference comprising the future SS and police leaders for occupied Soviet territories, in which Himmler discussed plans to eliminate 30 million Slavic people, and accompanied Himmler on inspections of murder units. Peiper's duties included relaying these units' statistical reports, a fact he would deny or obfuscate after the war.

Peiper held frontline command of an LSSAH battalion on the Eastern Front that gained notoriety for the wholesale slaughter of Soviet villages, earning the nickname "Blowtorch Battalion". During assignment in Italy, he secured the release of personnel captured by local partisans in Boves, only to betray the promise of amnesty and shell the town, a fact he would deny or obfuscate after the war. In March 1944, he subjected fresh teenaged recruits to brutal training, ordering five executed for "shirking their duties", a fact he denied after the war. Peiper commanded one of the four LSSAH combat groups during the Battle of the Bulge; in order to maintain momentum, captured soldiers and civilians were executed at Malmedy, Honsfeld, Büllingen, Ligneuville, Stavelot, Cheneux, La Gleize, and Stoumont, allegedly on his orders, a fact he would deny or obfuscate after the war.

As a commander, Peiper was noted for his fighting spirit but regularly incurred high casualties due to aggressive, headlong tactics and disregard for reconnaissance. In November 1943 he was appointed commander of the 1st SS Panzer Regiment despite no experience leading tanks; within one month only twelve functional tanks remained. Although he managed one of the few successful breakthroughs in his sector of the Ardennes offensive, his overextension led to encirclement by American forces and the near-total destruction of his unit, with Peiper himself estimating a successful retreat of 717 soldiers out of an original force of 3000.

In 1946, Peiper was tried and convicted for war crimes pertaining to Malmedy; originally sentenced to death by hanging, this was commuted to life imprisonment after a procedural review confirmed allegations of misconduct during pre-trial interrogations, and subsequent lobbying (chiefly by fellow ex-SS) secured an early release. He was named in multiple German trials in the 60s, but a formal investigation into the Boves massacre stalled due to lack of evidence. Although Peiper did not publicly join the denialist ex-SS veterans' association HIAG, he benefited from its lobbying and maintained correspondence with wartime colleagues.

In an ironic bookend, Peiper died on Bastille Day 1976 in a house fire after he was exposed living in France. A group calling itself "The Avengers" claimed responsibility, although the culprits were never identified.