Finding that he had a talent for painting, especially portraiture, Peale studied for a time under John Hesselius and John Singleton Copley. John Beale Bordley and friends eventually raised enough money for him to travel to England to take instruction from Benjamin West. Peale studied with West for two years beginning in 1767, afterward returning to America and settling in Annapolis, Maryland. There, he taught painting to his younger brother, James Peale, who in time also became a noted artist.

Peale's enthusiasm for the nascent national government brought him to the capital, Philadelphia, in 1776, where he painted portraits of American notables and visitors from overseas. His estate, which is on the campus of La Salle University in Philadelphia, can still be visited. He also raised troops for the War of Independence and eventually gained the rank of captain in the Pennsylvania militia by 1777, having participated in several battles. While in the field, he continued to paint, doing miniature portraits of various officers in the Continental Army. He produced enlarged versions of these in later years. He served in the Pennsylvania state assembly in 1779 – 1780, after which he returned to painting full-time.

Peale was quite prolific as an artist. While he did portraits of scores of historic figures (such as James Varnum, John Hancock, Thomas Jefferson, and Alexander Hamilton), he is probably best known for his portraits of George Washington. The first time Washington ever sat for a portrait was with Peale in 1772, and there would be six other sittings; using these seven as models, Peale produced altogether close to 60 portraits of Washington. In January 2005, a full length portrait of "Washington at Princeton" from 1779 sold for $21.3 million dollars, setting a record for the highest price paid for an American portrait.

One of his most celebrated paintings is The Staircase Group (1795), a double portrait of his sons Raphaelle and Titian painted in the trompe l'oeil style. It is in the collection of the Philadelphia Museum of Art.

Around 1804 he obtained the American patent rights to the polygraph from its inventor John Isaac Hawkins, about the same time as the purchase of one by Thomas Jefferson. Peale and Jefferson collaborated on refinements to this device, which enabled a copy of a handwritten letter to be produced simultaneously with the original.

Peale had a great interest in natural history, and organized the first U.S. scientific expedition in 1801. These two major interests combined in his founding of what became the Philadelphia Museum, and was later renamed the Peale Museum. This museum is considered the first. It housed a diverse collection of botanical, biological, and archaeological specimens. Most notably, the museum contained a large variety of birds which Peale himself acquired, and it was the first to display North American mastodon bones (which in Peale's time were referred to as mammoth bones; these common names were amended by Georges Cuvier in 1800, and his proposed usage is that employed today).

The display of the "mammoth" bones entered Peale into a long standing debate between Thomas Jefferson and Comte de Buffon. Buffon argued that Europe was superior to the Americas biologically, which was illustrated through the size of animals found there. Jefferson referenced the existence of these "mammoths" (which he believed still roamed northern regions of the continent) as evidence for a greater biodiversity in America. Peale's display of these bones drew attention from Europe, as did his method of re-assembling large skeletal specimens in three dimensions.

The museum was among the first to adopt Linnaean taxonomy. This system drew a stark contrast between Peale's museum and his competitors who presented their artifacts as mysterious oddities of the natural world.

The museum underwent several moves during its existence. At various times it was located in several prominent buildings including Independence Hall and the original home of the American Philosophical Society. The museum would eventually fail in large part because Peale was unsuccessful at obtaining government funding. After his death, the museum was sold to, and split up by, showmen P. T. Barnum and Moses Kimball.

In 1762, Peale married Rachel Brewer (1744 – 1790), who bore him ten children. The sons included Raphaelle Peale (1774 – 1825), Rembrandt Peale (1778 – 1860), and Rubens Peale (1784 – 1865). Among the daughters: Angelica Kauffman Peale married Alexander Robinson, Priscilla Peale married Dr. Henry Boteler, and Sophonisba Peale married Coleman Sellers. In 1791, he married Elizabeth de Peyster (d. 1804), his second wife, with whom he had another six children. One son, Franklin Peale, born on October 15, 1795, became the Chief Coiner at the Philadelphia Mint. His last son, Titian Ramsay Peale (1799 – 1885), became an important naturalist and pioneer in photography. Their daughter, Elizabeth De Peyster Peale (1802 – 57), married William Augustus Patterson (1792 – 1833) in 1820. Hannah More, a Quaker from Philadelphia, became Peale's third wife in 1804. She helped raise the children from his previous two marriages.

Peale could accurately be described as a "Renaissance man", having expertise not only in painting, but also in other diverse fields, such as carpentry, dentistry, optometry, shoemaking, and taxidermy. In 1802, John Hawkins patented the second official physiognotrace, a mechanical drawing device, and partnered with Peale to market it to prospective buyers. Peale sent a watercolor sketch of the physiognotrace, along with a detailed explanation, to Thomas Jefferson. The drawing now sits with the Jefferson Papers in the Library of Congress. Peale wrote several books, among which were An Essay on Building Wooden Bridges (1797) and An Epistle to a Friend on the Means of Preserving Health (1803). Peale named all of his sons for artists or scientists, and taught them to paint. Three of them, Rembrandt, Raphaelle, and Titian, became noted artists in their own right.

He was the brother-in-law of Nathaniel Ramsey, a delegate to the Congress of the Confederation. The World War II Liberty Ship SS Charles Willson Peale was named in his honor.