Spier grew up in Broek in Waterland as the son of Jo Spier, a very popular Dutch artist and illustrator, and Tineke van Raalte. His father was Jewish, and, during the Second World War, Peter was one of nine prisoners of Villa Bouchina and was later in Theresienstadt. After the war he studied at the Rijksakademie in Amsterdam and joined the Royal Netherlands Navy for four years. The entire Spier family emigrated to the United States in 1950. Peter started his career at advertisement agencies and only later focused on writing and illustrating children's books.

Like other children's illustrators such as Beatrix Potter, Peter Spier demonstrates his talent and skills as an artist/illustrator using pen, ink and watercolour on paper. Many of Spier's illustrations are extremely detailed and historically accurate. Close examination will often yield a humorous scene not readily apparent at first glance the finding of which often delights readers of all ages.

Spier reserved all rights and retained the copyrights to his works. In correspondence he noted that many of the original publishing plates used to reproduce his work were not available though the original works were thought to survive.

The Doubleday & Company, Inc., of Garden City, New York originally published many of Spier's works including The Mother Goose Library Series: "London Bridge Is Falling Down!". More recent publications can be found under the labels Double Day Books For Young Readers, Dragonfly Books and Random House.

He was awarded the 1978 Caldecott Medal. He received the Lewis Carroll Shelf Award (1977) for his book, Noah's Ark. He was also awarded a Christoper Award for his book People in 1981, which was nominated for a National Book Award in 1982.