Born and raised in California, Folger studied business and graduated from Yale University where he was an athlete on their football, track and field, and polo teams. Peter Folger later served in World War II as a Marine Major.
In 1963, after having helped to build the family firm into the third largest coffee wholesaler in the United States, Folger sold the company to Procter & Gamble for 1,650,000 shares of P&G common stock. However, he and the Folger family continued to operate Folgers as a P&G subsidiary.
He married twice, first to Inés Mejía (June 25, 1907 - July 15, 2007), the daughter of Eduardo Mejía, the consul general for El Salvador, and wife Gertrudes Guirola, sister of Edwin Mejía (born San Francisco, California, 26 April 1897), and member of a prestigious California land grant family. They went on to have two children, Abigail Anne, born in San Francisco, California, on August 11, 1943 and Peter, Jr, born in 1945. Inés filed for divorce which was granted in 1952. They shared joint custody of their two children.
On June 30, 1960, Peter married his 24-year-old secretary Beverly Mater (born October 10, 1935). They had one daughter together, Elizabeth, in January 1961. Peter and Beverly lived with their daughter at the Folger mansion located in Woodside, California until 1974 when they moved to a newly built home on Roberta Drive. The murder of his eldest daughter, Abigail Anne, in Los Angeles, California, on August 9, 1969, was said to have lessened Peter's desire to continue living at the Woodside estate, where she grew up.
After Abigail died, Peter conducted his own investigation into her death and spent the rest of his life protecting her from being the subject of salacious gossip, threatening legal action against anyone who tried to use her name in damning articles or books about the Tate murders. As a result, very little information is available about her.