Four goals from Martin Bavidge drew Peterhead to within three points of leaders Gretna with a game in hand.
Bavidge put the Blue Toon in front after 23 minutes and he netted his brace 11 minutes from the break running on to a clever Scott Michie flick to shoot low into the right corner of the net.
Peterhead dominated after the break and after Allan Youngson and Keith Gibson went close, Graeme Stewart pounced after 68 minutes to turn the ball into the net after keeper William McCulloch spilled a Jamie Buchan shot from the edge of the penalty area.
Bavidge netted his hat-trick in the 78th minute from the penalty spot after Scott Robertson had been brought down by substitute David McInally who had only been on the pitch for a minute.
Two minutes later Bavidge scored again with a first time shot from six yards following an inch-perfect throughball from Robertson.
Stenhousemuir played well up until the final third, with a 41st minute John-Paul McBride free kick from 25 yards which dipped onto the roof of the net the nearest they came to a goal.