Peter Thorneycroft was educated at Eton and the Royal Military Academy at Woolwich. He served in the Royal Artillery 1930-33 (commission) and again in 1939-45, when he also worked with the general staff. In the meantime he had been called to the bar at the Inner Temple in 1934-35, and then practised at Birmingham on the Oxford circuit. He was the Conservative MP for the Stafford constituency from a by-election in 1938 until 1945, when he was defeated by his Labour opponent Stephen Swingler, and then for the Monmouth constituency at a by-election a few months later in October 1945 until 1966.

Along with other members of the Tory Reform Committee, Thorneycroft pressed his party to support the Beveridge Report. Throughout the late 1940s Thorneycroft worked assiduously to refurbish the Conservative Party after its disastrous defeat in the 1945 general election. His opposition to the Anglo-American loan in the Commons earned him a reputation as an accomplished parliamentary debater. Peter Thorneycroft was briefly parliamentary secretary at the Ministry of Transport in the Conservative caretaker government in 1945 and served as President of the Board of Trade, 1951-57. He was instrumental in persuading the government in 1954 to abandon the party's support for protectionism and accept the General Agreement on Trade and Tariffs.

He gave strong support to Harold Macmillan in the 1957 Conservative Party leadership contest. He was, in consequence, briefly Chancellor of the Exchequer in 1957-58 but, together with Enoch Powell and Nigel Birch, he resigned in a disagreement over Conservative Party policy, particularly government expenditure. Macmillan, himself a former Chancellor, made a famous and much-quoted remark to the effect that the resignations were merely “little local difficulties”. In reality, Macmillan was deeply concerned about the possible effects of Thorneycroft's resignation, but chose to hide his worries from public view.

During his ‘wilderness years’ outside politics from 1958 to 1960, Thorneycroft travelled and painted. He was later appointed Minister of Aviation in 1960-62 and Minister of Defence in 1962-April 1964, subsequently Secretary of State for Defence, April-October 1964. The success of this period for Thorneycroft was the abolition of the separate Service departments and the creation of a single Ministry of Defence. Ted Heath, who became leader of the party in 1965, had been the party's chief whip when Thorneycroft resigned in 1958 and had seen the resignation as a betrayal.

Thorneycroft lost his seat at the March 1966 general election and in 1967 received a life peerage, taking a seat in the House of Lords as Baron Thorneycroft, of Dunston in the County of Stafford. Thorneycroft was a strong supporter of Margaret Thatcher's monetarist policies, and she made him chairman of the Conservative Party in 1975. He held this position until 1981.

He was made a Companion of Honour in 1980. He was the chairman of Pirelli Ltd. and of the Commonwealth Trust Fund. He was notable as an amateur watercolourist and held exhibitions, including those at the Trafford Gallery in 1961 and 1970 and the Café Royal in 1981 and 1989. In 1985 he published The Amateur: a Companion to Watercolour. Colonel Thorneycroft owned various houses in the area including Tettenhall Towers and Tong Castle.

He married in 1938 Sheila Wells Page who obtained a divorce in 1949. They had one son. He then married in 1949 Countess Carla Roberti, and they had one daughter. His London address was 42 Eaton Square SW1. He died on 4 June 1994. His papers are in the custody of the archives at the University of Southampton.