Peter was born at Balaguer, the eldest son and heir of Alfonso IV, then merely Count of Urgell, and his first wife, Teresa d'Entença. Peter was designated to inherit all of his father's title save that of Urgell, which went to his younger brother James.

Upon succeeding his father he called a cortes in Zaragoza for his coronation. He crowned himself, disappointing the Archbishop of Zaragoza and thus rejecting the surrender Peter II had made to the Papacy, in an otherwise traditional ceremony. According to his own later reports, this act caused him some "distress". He did, however, affirm the liberties and privileges of Aragon. Also while he was at Zaragoza an embassy from Castile had met him and asked that he promise to uphold the donations of land his father had made to his stepmother Eleanor, but he refused to give a clear answer as to the legitimacy of the donations.

After the festivities in Zaragoza, Peter began on his way to Valencia to receive coronation there. On route he stopped at Lleida to affirm the Usatges and Constitucions of Catalonia and receive the homage of his Catalan subjects. This offended Barcelona, at which the ceremony had usually been performed, and the citizens of that city complained to the king, who claimed that Lleida was on his way to Valencia. While in Valencia he decided on the case of his stepmother's inheritance, depriving her of income and outlawing her Castilian protector, Pedro de Ejérica. However, Pedro had enough supporters within Peter's domains that Peter was unable to maintain his position and in 1338, through papal mediation, Pedro was reconciled to the king and Eleanor received her land and jurisdictional rights. Peter was largely forced to capitulate by a new invasion from Morocco aimed at Castile and Valencia.

In 1338 he married Maria, second daughter of Philip III and Joan II of Navarre. In May 1339 he allied with Alfonso XI of Castile against Morocco, but his contribution of a fleet had no effect at the pivotal Battle of the Río Salado (October 1340).

Early on in his reign, a thorn in Peter's side had been James III of Majorca, his brother-in-law, the husband of his sister Constance. James had twice postponed performing the ceremony of homage to Peter, his feudal overlord, and when he finally performed it in 1339, it was on his terms. The rising economic star of Majorca, whose merchants were establishing independent markets and gaining trading privileges in the western Mediterranean, threatened the supremacy of Barcelona. The gold coinage of Majorca and the diplomatic equality granted it by the powers of France and Italy irked Peter further, while James also allied with Abu Al-Hassan, the king of Morocco and Peter's enemy. Peter's outrage, however, was given no outlet until 1341, when James, threatened with invasion by the French over disputed rights to the Lordship of Montpellier, called on his suzerain Aragon for aid. In order not to offend France nor to support James, Peter summoned the king of Majorca to a cort at Barcelona, to which he knew he would not come, and when James or a representative of his failed to appear, Peter declared himself free from the obligations of an overlord to James.

Peter then opened a legal process against James, with the intent of dispossessing him of his kingdom. He alleged that the circulation of James' coinage in the Counties of Roussillon and Cerdagne to be an infringement on the royal right of monopoly of coinage. This was open to question, considering the ancient customs of Roussillon and Cerdagne, but Peter was prepared to move forward anyway. The interference of Pope Clement VI, however, granted James a hearing in Barcelona in front of papal delegates. Peter, for his part, spread rumours that James was seeking to capture him. James, fearing that Peter would stoop to invading Majorca and seizing it by force, returned to the island to prepare its defence. In February 1343 Peter declared James a contumacious vassal and his kingdom and lands forfeit.

The legal process being terminated, Peter went to war, on the advice that the islanders were burdened by taxes and would readily rise in his support. In May a fleet which had been blockading Algeciras landed at Majorca and quickly defeated James' army at the Battle of Santa Ponça. Peter received the submission of all the Balearics and confirmed the privileges of the islands as they had been under James I. Though James sued for peace and Pope Clement attempted to mediate it, Peter returned to Barcelona prepared to invade Roussillon and Cerdagne. After these were finally conquered in 1344 James surrendered on a safe conduct, only to find himself ignominiously reduced to the status of a petty lord. In March Peter had declared his realm incorporated into the Crown of Aragon in perpetuity and ceremoniously had himself crowned its king.

By the Pact of Madrid, Peter was constrained to aid Alfonso XI of Castile in his successful attack on Algeciras (1344) and his failed attempt on Gibraltar (1349) by defending against a Moroccan counterattack.

As Peter had no male issue, his brother Count Jaume of Urgel was the presumptive heir to the Aragonese throne. Peter grew to mistrust the intentions of Jaume over time. Peter decided that he would instead name his daughter Constanca as his heir notwithstanding the precedents established by James I and Alfonso IV to exclude females from the throne. To this end, he demanded that Jaume cede his post as procurator general, a position which, by tradition, was reserved for the second in line to the Aragonese throne. Jaume fled to Zaragoza where he gained the favor of certain nobles who wished to reassert their powers vis a vis the monarch. Peter eventually succumbed to the pressure to hold a cortes in Zaragoza where he made numerous concessions of royal authority to quell a rebellion he was not yet in a position to crush. One of such concessions was to revoke his attempt to name Constanca as heir, and to restore Jaume as procurator general. To avert additional damage, Peter dissolved the cortes on the premise that he had to address a crisis developing in Sardinia. Not long thereafter, while Peter was in Catalonia, Jaume suddenly died. Many suspected Peter of having arranged to have Jaume poisoned. Deprived of their leader, the Union of Aragon was greatly weakened.

Venturing next to Valencia, Peter encountered the nascent Valencian Union which had taken its cue from its counterpart in Aragon. At Murviedro, Peter was forced to name his stepbrother Ferran as the new procurator general. Additional concessions of royal authority were made to appease the Unionists. This time when he attempted to leave a bad situation, Peter was held under guard in Valencia as a prisoner of the Union. Suffering perhaps his greatest humility, he and his queen were forced to dance with the common folk to show his subservience. Ironically, his salvation was the Black Death. Valencia was felled by this plague in May 1348, enabling Peter to escape amid the confusion. Assembling an army of increasingly powerful royalists in Aragon, Peter attacked the unionist forces at the Battle of Epila on July 21, 1348. Peter won a complete victory. Proceeding to Zaragoza, Peter executed only thirteen Union leaders. By fourteenth century standards, this was a great display of magnaminity. Not the same can be said for the fate of Valencia. After being persuaded not to burn the entire city and sow it with salt, many were executed. Of particular note, he had the bell that the Valencian Union rang to summon its meetings melted down. The molten metal from the bell was then poured down the throats of the Union leaders so that they "should taste its liquor."

In 1356, he engaged with Peter I of Castile in what was called the "War of the Two Peters". It ended in 1375 with the Treaty of Almazán, without a winner due to the Black Death and several natural disasters.

He conquered Sicily in 1377 but the possession was given to his son Martin.

Throughout his reign, Peter IV had frequent conflicts with the inquisitor general of Aragon, Nicolau Aymerich.

In 1349, James invaded Majorca, but was soundly defeated by Peter's troops at the Battle of Llucmajor, in which he died. After James' death, Peter allowed James IV, his successor, to retain his royal title on purely formal terms until his death in 1375. After that date, Peter assumed the titular. Majorca remained one of the component crowns of the Crown of Aragon until the Nueva Planta decrees.

At a cortes celebrated at Barcelona, Vilafranca del Penedès and Cervera in 1358 – 1359, Peter instituted the Generalitat. Castile had recently invaded Aragon and Valencia and the cortes decided to streamline the government by designating a dozen deputies to oversee the fiscal and material policies of the Crown. The first "President of the Generalitat" was Berenguer de Cruïlles, Bishop of Girona (1359).

Toward the end of his reign (c. 1370) Peter ordered the compilation of the Chronicle of San Juan de la Peña to record the historical basis for the authority of the crown.

On 1338, he married Maria of Navarre (1329 – 1347), daughter of Joan II of Navarre. She bore him three daughters and one son. In 1347 in Barcelona, he married Leonor of Portugal (1328 – 1348), daughter of Afonso IV of Portugal. She died one year later of the Black Death. His third marriage, on 27 August 1349 in Valencia was to Eleanor of Sicily (1325 – 1375), daughter of Peter II of Sicily. Four children were born from this marriage. His last marriage, in 1377 in Barcelona, was to Sibila of Fortià (? - 1406), who bore him a son and a daughter.