Peca began his junior career with the Sudbury Wolves of the Ontario Hockey League after they selected him in the first round of the 1990 player draft. He was traded to the Ottawa 67's where he blossomed into one of the league's top offensive players. He was drafted in the second round, 40th overall, by the Vancouver Canucks in the 1992 NHL Entry Draft. He made his NHL debut with the Canucks in the 1993–94 season, playing four games before cracking the lineup as a regular in the lockout-shortened1994–95 season. He would then be traded to the Buffalo Sabres during the 1995 NHL Entry Draft as part of a package that sent Alexander Mogilny from Buffalo to Vancouver. Peca twice won the Frank J. Selke Trophy for being the best defensive forward, in 1996–97 and 2001–02. He captained the Buffalo Sabres to the Stanley Cup Finals in 1999. His nickname was "Captain Crunch" because of his penchant for delivering bone-crushing open ice hits. For the 2000–01 season, Peca and the Buffalo Sabres could not agree on a contract. Peca went without a contract the entire season. Peca was later traded to the New York Islanders in exchange for Tim Connolly and Taylor Pyatt, where he led the Islanders to their first playoff berth in seven years. Peca was hip-checked by Toronto Maple Leafs' Darcy Tucker during the 2002 Stanley Cup playoffs in game five of the first round. The check blew out Peca's MCL and ACL on his left knee, ending his season and delaying his entry into the 2002–03 season. No penalty was assessed, but the NHL made clipping illegal as a result of the incident. Peca was acquired by the Edmonton Oilers in a trade with the Islanders in exchange for Mike York. He was part of the Cinderella Edmonton Oiler team that made a run to the Stanley Cup Finals. Peca had six goals and five assists in the 2006 playoffs. On July 18, 2006, the Toronto Maple Leafs announced that they had signed Peca as a free agent to a one-year, $2.5 million contract for the 2006–07 season, making Tucker and Peca teammates. During a game against the Chicago Blackhawks on December 22, 2006, Peca collided with Chicago defenceman Jim Vandermeer with 5:17 left in the first period. Vandermeer was assessed a minor penalty and a game misconduct for the hit. Peca sustained a fractured tibia at the base of his right knee and suffered significant ligament damage, and missed the remainder of the 2006–07 season. On August 21, 2007, Peca signed a one-year contract with the Columbus Blue Jackets. On October 11, 2008, he received an indefinite suspension after grabbing referee Greg Kimmerly's arm in Columbus' first game of the 2008–09 season. On January 19, 2010, through the National Hockey League Players' Association, Peca announced his retirement from professional hockey.
Beginning in the 2012–13 season, Peca was named head coach of the Buffalo Jr. Sabres of the Ontario Junior Hockey League, where he coached through the 2013–14 season. After the 2012–13 season, he was named OJHL Coach of the Year. In his two years coaching, he had 66 wins in 108 regular season games. Michael Peca will serve as Head Coach of the Bantam Major Jr. Sabres in addition to his duties as General Manager and Director of Hockey Operations for the Buffalo Junior Sabres Junior A team.
