Pederson returned to the World League in 1995, playing for the Rhein Fire. In 1995, Pederson was selected by the Carolina Panthers in the NFL Expansion Draft, but he was released by the Panthers prior to training camp that year. For the 1996-1998 seasons, Pederson was the Packers' backup quarterback. In 1999 he signed with the Philadelphia Eagles to serve as a temporary starter until then-rookie Donovan McNabb was ready to start. The next year Pederson filled the same role for the Cleveland Browns and their sophomore quarterback, Tim Couch. In 2001, Pederson again joined Green Bay, and he remained the backup quarterback there, up until his retirement after the 2004 NFL season.
After the 2004 season, due to injury, Pederson retired from football.
After his retirement, Pederson was hired as head football coach of Calvary Baptist Academy, a private, Christian high school in Shreveport, Louisiana. Calvary was going into its second year as a program when Pederson signed on in March 2005.
Pederson was the head coach at Calvary for four years, and holds a 33-7 record in the regular season and an 8-3 record in the post-season. The Cavaliers were in the state playoffs all four years with Pederson as head coach. In 2007, he led the Cavaliers to the semi-finals and lost to State runners-up St. James Wildcats. He led the Cavaliers to their first District Title in 2007.
On January 29, 2009, Pederson was hired as the offensive quality control coach for the Philadelphia Eagles.
On February 8, 2011, he was promoted to quarterbacks coach, replacing James Urban, who was promoted to assistant offensive coordinator. Under Peterson's guidance in 2011, the Eagles set a franchise record with 6,386 yards.