Thompson was the great schoolboy star of his day and was pursued by almost every top club in the country when the time came to leave school. He became a regular first division player at 17 for Preston, making his debut against Arsenal on 30 August 1960 after Tom Finney's retirement. Bill Shankly had been impressed by the speed and trickery of the young winger during a marathon fifth round FA Cup tie between Liverpool and Preston in February 1962 which went to a second replay at Old Trafford. After two goalless draws the deadlock was finally broken by Thompson when the ballfell invitingly for him and he hit it straight back past 'keeper Bert Slater to claim a famous win. Thompson was a regular for three seasons for Preston and following relegation from their only top-flight season during his spell there the 20-year-old moved to Liverpool for £37,000. He almost messed up his transfer to the Reds with an inappropriate request as he told LFChistory.net. "I went to Anfield from Preston and there were thousands of people outside. I got my way through to the front door and Shankly is there. 'Why are all these here for?', I asked. 'You!', Shankly thundered. 'You? 'Me?', I gasped. He took me all around Melwood. He showed me Anfield. Took me to the office. The Chairman came in: 'Could you sign here?' 'Actually Mr. Shankly, I would like a signing-on fee.' 'You what? I am giving you the chance to play in the greatest city in the greatest team that is going to be in the world and you want illegal money. Get out!' 'Give me the pen,' I said. So I signed. Best thing I ever did."

The Preston lad was an amazing right-footed left winger, who tormented full-backs having spent countless hours on the training ground perfecting crossing with his left on the right side. Which way was Tommo going to go? His opponents didn't have a clue and most of the time his teammates didn't know what to expect either. Liverpool was envied by other teams for possessing such a powerful pairing on opposing flanks as Thompson and Callaghan. Thompson went straight into Liverpool's first team on his arrival and played in all 42 League games as the club won the title by four points. He won another championship medal in 1966 as well being part of the first Liverpool team to win the FA Cup the year before. Thompson came to Alf Ramsey's attention and would surely have won more than just 16 caps had the then England boss not decided to axe traditional wing play in favour of his own tactics. Who can argue with him after England's World Cup win in 1966? Thompson was desperately unlucky at international level, first in 1966 and then again in 1970 being named in the initial World Cup squad of 28 players before losing out both times as one of the "unlucky six". 

Thompson had avoided any major injuries and only missed twelve League games in seven and a half seasons when he suffered an injury in December 1970 and was out until March 1971. He recovered in time to come off the bench to replace Alun Evans in the 1971 FA Cup final against Arsenal and provided Steve Heighway with the opening goal in the second minute of extra-time. Unfortunately, was not enough to win the game. Thompson started the first seven League games of the 1971/72 season but an injury forced him out and once he was match-fit again he only appeared sporadically in the first team and spent the rest of the season languishing in the reserves. Thompson didn't make a single first-team appearance for Liverpool in his last two years at the club. He suffered from serious knee injuries and was ignored by his boss Shankly who famously had no time for injured players. "When my day was up Shankly was horrible. He treated me like a son for about nine years," Thompson revealed to LFChistory.net. "I had two operations on my left knee. When I had my second operation the specialist said: 'You'll never play again.' I got upset. I was only thirty. 'When you train hard, your knee will blow up.' So when I went back to Liverpool, the boss said: 'You are knackered. You are finished.' 'Who are you talking to, me?,' I responded. That's how he was. 'People are working on the docks to pay you money,' he told me. 'You are a cripple!'" Shankly wouldn't pay Thompson's contract up and in the end the Liverpool idol couldn't motivate himself to go to training. "Steve Heighway was doing fabulous. I am not going in having Shankly swear at me," Thompson explained. Jimmy Armfield at second division Bolton took a chance on Thompson and acquired him on loan in December 1973. He signed for Bolton a month later for £18,000 and is considered one of the biggest bargain buys in the club's history. Thompson retired in April 1978 after Bolton won the second division title, having played 132 matches in his indian summer.

Rarely has a footballer with as much natural ability worn the shirt of Liverpool and Peter Thompson is in a class only reserved for a select few. Shankly didn't have a problem with his former talisman after he left Liverpool, as he was no longer a burden on the club's payroll, and sang his praises in Thompson's testimonial brochure: "His work rate was outstanding, his fitness unequalled, his balance like a ballet dancer. I have no hesitation in placing Peter up among the all-time greats – alongside such players as Tom Finney, Stanley Matthews and George Best. They say he didn’t score enough goals, they said his final pass wasn’t telling enough. Well, if he had scored goals as well as everything else he did, he would have been in the same category as Jesus Christ!"