Peel played his first Test for Wales in 2001 against Japan, having earlier made his top level bow with Llanelli RFC in 2000. Peel developed quickly at club and international level, deputising for Rob Howley during the 2002 Six Nations and joining the Llanelli Scarlets regional setup in 2003.

Peel was selected in Steve Hansen's squad for the 2003 World Cup. He featured in all of Wales' games, including a substitute appearance against England in the quarter final.

Peel was the starting scrum-half for Wales' tour to Argentina and the Autumn Internationals in 2004 and entered into the form of his life ahead of the 2005 Six Nations. Peel was instrumental in Wales' Grand Slam, with his outstanding distribution and eye for a sniping break meshing seamlessly with Wales' quick offloading philosophy.

At the end of the tournament he was widely touted as the best scrum-half in the world, and was selected for the 2005 British Lions tour to New Zealand. Peel was the youngest player in the squad, but started all three of the test matches against the All Blacks.

He was given greater responsibility in an injury ravaged Wales side for the 2006 Six Nations, but was carried from the field with a serious shoulder injury against Italy. The injury ruled him out for the remainder of the season.

During the 2007 Six Nations, Peel found his Wales place under pressure from Mike Phillips. Dwindling form had robbed Peel of his lightning quick distribution and the more physical Phillips was hitting a rich vein of form.

Peel retained his place for the 2007 World Cup, captaining the side in the opener against Canada. Wales' poor performances at the tournament again raised questions over Peel's form.

Under new Wales coach Warren Gatland, Peel's opportunities have been limited. Phillips was given the No.9 jersey for the 2008 Six Nations opener against England and his stunning performances meant that Peel was limited to a single start during the tournament. At the end of the 2007-08 season Peel moved from the Scarlets to Premiership side Sale in an attempt to revitalise his game, but found himself involved in a rotation policy with England's Richard Wigglesworth.

Peel was excluded from Wales' 2009 Six Nations squad in January 2009 before an injury to Gareth Cooper allowed him a recall as understudy to Mike Phillips. He featured as a replacement throughout the Championship and was also included on the tour of North America later that year. He retained his place for the end of year internationals but an ankle injury saw him sidelined for the 2010 Six Nations.