When the Civil War began Peabody, living in the highly divided state of Missouri, made his devotion to the Union known. He was first appointed major in the 13th Missouri Volunteer Regiment and then on September 1, 1861 he was appointed colonel of the regiment. The regiment was posted to garrison duty at Lexington, Missouri. There Colonel Peabody took an active part in the First Battle of Lexington where he was hit by a spent bullet in the chest. Painful, but not serious, Peabody was being carried off the field on a stretcher when he was hit a second time in the foot. The combination of the two wounds would incapacitate him for several weeks. Peabody and the rest of the garrison were taken prisoner after the Union surrender on September 20, 1861. He was officially exchanged in December 1861. Due to his regiment's capture it was removed from the official roster of Missouri regiments and another "13th Missouri" had meanwhile been created in its place. Peabody went about rebuilding his regiment which was now designated the 25th Missouri.