After spending time working with his brother in Newburyport and volunteering in the War of 1812, Peabody moved to Baltimore, Maryland, to work for the wholesale dry goods firm of Riggs & Peabody. By 1827, Peabody traveled to London, England, buying and selling goods within the international trade circle. Ten years later, he set up residency there.

In London, Peabody's merchant banking firm was the most well known and trusted of the American businesses, partially due to his success in a risky loan of eight million dollars to the State of Maryland. Peabody's firm dealt largely with American businesses buying and selling raw materials that fueled the Industrial Revolution. After he retired in 1864, Peabody's partner reconfigured the firm and named it J. S. Morgan and Company, the predecessor to the famous New York financial institution.

Peabody's success in business meant he acquired great amounts of wealth, which he set out to contribute to many worthy causes near the end of his life. The primary recipients of his monetary donations were educations institutions such as the Peabody Institutes in Peabody, Danvers, and Baltimore, the Peabody museums at Harvard, Yale, and Salem, Massachusetts, and the George Peabody College for Teachers in Nashville, Tennessee. Not forgetting the city of London- where Peabody spent over thirty years of his life- he created the Peabody Donation Fund (now the Peabody Trust) which would house the working poor of London.

George Peabody was well-loved in England. In gratitude for his gift of the Peabody Donation Fund, Queen Victoria gave him a miniature portrait of herself (now on display at the Peabody Institute, Peabody) and offered to make him a knight. He respectfully declined this honor because he would be forced to renounce his American citizenship in return. Instead of knighthood, Peabody received the freedom of the City of London and ordinary citizens collected enough money to erect a statue of him behind the Royal Exchange.