Peled was born in 1923 in Haifa, then the main port of the British Mandate of Palestine, and grew up in Jerusalem. Like many youth of that period, he was involved in one of the Socialist Zionist youth movements. At the age of 18 he joined the Palmach, the newly created Jewish paramilitary defense organization, as Palestine was becoming threatened by Rommel's rapid advance across North Africa. After Rommel's defeat in 1943 however, Peled was involved in various acts against the continuing British rule. He served in the Palmach's Jerusalem Platoon together with Yitzhak Rabin, with whom Peled was to maintain lifelong contact.