Pope Eugene III sided with Patriarch Fulcher in the latter's dispute with Queen Melisende over the see of Tyre, and in 1151 Peter was made archbishop of Tyre. Amalric of Nesle succeeded him as prior of the Holy Sepulchre.
As the second highest-ranked prelate in the kingdom, Peter regularly attended the royal court and occasionally accompanied the king on military campaigns. Historian Bernard Hamilton believes that it is due to Peter's advice to the king that Jerusalem recognized Alexander III as pope after the contested 1159 papal election. Peter also held onto his beliefs: when the imperious Patriarch Fulcher ordered the prior and canons of the Mount of Olives to walk barefoot through Jerusalem as public penance, Peter joined them and convinced his suffragans, the bishops of Banyas and Beirut, to do the same, thus expressing his disapproval of the sentence. Peter held the office for 13 years.
Peter is the only archbishop of Tyre of whom the later archbishop and chronicler William of Tyre was not critical. William described him as:
... a man of remarkable innocence and gentleness of character. He feared God and abhorred evil, and his memory will be held blessed by God and by men. He was a nobleman by birth, but he was even more noble in his spiritual life. Volumes could be written about his life and character.