Pederson was born in Bellingham, Washington, in 1968. He attended Ferndale High School in nearby Ferndale, Washington, and was an All-State selection in football, basketball, and baseball. After high school he graduated from Northeast Louisiana University, where he was quarterback from 1987 through 1990. He still holds multiple passing records at the school.
Pederson originally signed as a rookie free agent by the Miami Dolphins on May 1, 1991, out of Northeast Louisiana University (now University of Louisiana at Monroe) in Monroe, Louisiana. He was waived on August 17, 1991, before the start of the regular season. After spending the 1991 season as a free agent, the New York/New Jersey Knights of the World League of American Football (WLAF) drafted him in the fifth round for the first pool of draft-eligible players on February 4, 1992. The second pool, which was drafted from on February 20, consisted of players allocated by NFL teams to the league. He was the backup quarterback to Reggie Slack with the Knights from March to May 1992.
After the WLAF season finished, he was re-signed by the Dolphins on June 2, 1992. Pederson spent 1992 training camp with the Dolphins, before being released during final roster cuts again. He was subsequently re-signed to the team's practice squad, where he practiced on the scout team until he was waived on October 8, 1992. He was re-signed by the Dolphins after the season on March 3, 1993. After his third training camp with the Dolphins, he was waived again on August 31, 1993. For the second consecutive season, Pederson was re-signed to the team's practice squad, on September 1, 1993. Dan Marino, the Dolphins' starting quarterback since 1983, ruptured his Achilles' tendon in a week 6 game against the Cleveland Browns on October 10, 1993, forcing backup Scott Mitchell to replace him. Pederson replaced Marino on the active roster, and served as Mitchell's backup for the next four games. Pederson made his NFL debut on October 24, 1993, in a week 8 game against the Indianapolis Colts. He helped head coach Don Shula win his NFL-record 325th victory as a coach when Mitchell suffered a separated shoulder in a week 11 game against the Philadelphia Eagles on November 14, 1993. Pederson served as the backup to recently-acquired Steve DeBerg for the three games Mitchell missed with injury. He briefly entered a week 14 game against the New York Giants while DeBerg was receiving stitches on his face. Mitchell returned as the Dolphins' starter after week 15, and Pederson was released in favor of backup DeBerg and third-string quarterback Hugh Millen on December 16, 1993.
Pederson re-signed with the Dolphins on April 16, 1994, after the season ended. He spent the entire 1994 season on the Dolphins' active roster as the third-string quarterback behind Marino and Bernie Kosar. On February 15, 1995, Pederson was selected by the Carolina Panthers in the twenty-second round of the NFL Expansion Draft, after being placed on the Dolphins' available players list on January 19, but was released on May 24, 1995. He returned to the World League after his release, playing with Rhein Fire. Pederson re-signed with the Dolphins again in June 1995. After competing with Dan McGwire throughout training camp, Pederson was waived on August 22, 1995. Marino suffered a knee injury during a week 6 game, so Pederson was re-signed on October 10 to serve as the third quarterback behind Kosar and McGwire for the next two games. He was released again after Marino returned for week 9 on October 24.
Pederson worked out for the Green Bay Packers following week 10 in 1995, due to a season-ending injury suffered by backup Ty Detmer and a minor injury sustained by starter Brett Favre. Third-string quarterback T. J. Rubley was forced to play in week 10 and threw a game-ending interception after calling an audible, going against head coach Mike Holmgren's playcall. The Packers signed Bob Gagliano to serve as the third-stringer quarterback for weeks 11 and 12. Pederson replaced Gagliano as the third-string quarterback when he signed with the Packers on November 22, 1995. The Packers claimed Jim McMahon off waivers from the Browns to serve as Favre's backup ahead of Pederson and Rubley on November 29, 1995. Rubley was waived on December 13, leaving McMahon and Pederson as Favre's backups. Favre did not miss any games, so Pederson did not see any game action for the Packers in 1995. Pederson served as the third quarterback behind Favre and McMahon in 1996, playing in one game but recorded no statistics. He received a Super Bowl ring following the Packers' win over the Patriots in Super Bowl XXXI. He re-signed with the Packers with a two-year contract on February 20, 1997. Pederson was again the third quarterback throughout 1997, backing up Favre and Steve Bono. Pederson beat out Rick Mirer for the backup job to Favre, as well as the primary placekick holder job, in 1998. In a week 5 loss to the Minnesota Vikings, Pederson replaced Favre, due to Favre's ineffectiveness, and threw two touchdowns in his place. However, Pederson suffered a broken jaw that knocked him out for the team's next four games.
Pederson signed a three-year, $4.5 million contract with the Philadelphia Eagles on February 18, 1999, to become the team's starting quarterback under new head coach Andy Reid, who was Pederson's quarterbacks coach in Green Bay from 1997–1998. The Eagles drafted Donovan McNabb with the second overall pick in the 1999 NFL Draft in April 1999, and Reid said Pederson would remain the starter until McNabb is ready to play. In his nine starts for the Eagles, Pederson had a 2–7 record, a 51.6% completion rate, 1,168 passing yards, six touchdowns, and nine interceptions. In his first career start, a week 1 game against the Arizona Cardinals, Pederson threw two touchdowns in the first quarter to help give the Eagles a 21–0 lead. The Cardinals came back, however, and won the game on a field goal as time expired, 25–24. Pederson went 12-for-25 for 91 yards and two touchdowns in the game. McNabb replaced Pederson, who suffered a bruised throwing shoulder, after one half in a week 2 loss to the Tampa Bay Buccaneers, in which Pederson went 12-of-19 for 100 yards and an interception. Pederson started a week 3 shutout loss (26–0) to the Buffalo Bills, going 14-of-26 for 137 yards and two lost fumbles, before being replaced by McNabb again in the fourth quarter. In a week 4 loss to the New York Giants, Pederson went 6-for-15 for 75 yards and two interceptions before being replaced by McNabb after halftime. Pederson's first NFL win came in week 5 in a game against the Dallas Cowboys. He played the entire game, going 11-of-29 for 145 yards, one touchdown, and one interception. Pederson played the entirety of the next three games, posting a 1–2 record while throwing three touchdowns and three interceptions. In his final start as an Eagle, Pederson was benched at halftime of a week 9 game against the Carolina Panthers after going 3-of-9 for 28 yards and being down 23–0. He did not see game action at quarterback again until a week 14 game against the Cowboys in which McNabb suffered an injury in the fourth quarter. Pederson went 8-for-12 for 108 yards and a touchdown in the loss, and Koy Detmer received the start ahead of him in week 15 with McNabb still injured. After spending the next season's training camp with the team, the Eagles released Pederson on August 28, 2000.
Pederson considered retirement after being released by the Eagles, but instead signed a two-year contract with the Cleveland Browns on September 2, 2000. The Browns' backup, Ty Detmer, suffered a season-ending injury, and the Browns needed a backup quarterback to starter Tim Couch. This was the second time in Pederson's career that he was signed to replace an injured Ty Detmer. Pederson started as the third quarterback behind Couch and Spergon Wynn, until Couch suffered a season-ending injury in week 7. Pederson started the next six games, posting a 1–5 record. In a week 13 game against the Baltimore Ravens, he was knocked out of the game with bruised ribs and replaced with Wynn. Wynn started the next week against the Jacksonville Jaguars, but he suffered a season-ending injury and Pederson replaced him. Pederson returned for the final two games of the season, losing both, including a 35–24 loss to his former team, the Eagles, and a 24–0 shutout loss to the Tennessee Titans. Pederson was released after the season on February 22, 2001.
The Packers re-signed Pederson to a one-year contract on March 13, 2001, to replace backup Matt Hasselbeck, who was traded to the Seattle Seahawks. Pederson was the primary backup to Favre for the entire 2001 season, and was the primary placekick holder in every game. He was re-signed to a one-year, $650,000 contract with the Packers on April 2, 2002. Pederson again was the backup quarterback and primary holder in all 16 games in 2002. In a week 7 game against the Washington Redskins, Favre suffered a sprained knee and Pederson took most of the snaps in the second half, going 9-for-15 for 78 yards to help win the game 30–9. Pederson also played in games against the Miami Dolphins, Detroit Lions, and New York Jets. He re-signed with the Packers to a one-year, $750,000 contract on April 29, 2003. For the third consecutive season, Pederson backed up Favre in all 16 games and held placekicks. He completed both of his passes during the regular season for a total of 16 yards. The Packers re-signed Pederson to a one-year contract on April 28, 2004. Tim Couch was signed to compete for the backup quarterback job, but lost out to Pederson and was released on September 5, 2004. In a week 3 game against the Indianapolis Colts, Pederson replaced Favre in a blowout loss and went 4-of-6 for 34 yards and an interception. The next week, a week 4 game against the New York Giants, Favre sustained a concussion in the third quarter, and Pederson replaced him at quarterback. Pederson went 7-of-17 for 86 yards and an interception in the loss before he suffered a hit to his side in the third quarter that resulted in a cracked bone in his back, a torn muscle in his side, and a broken rib. He stayed in the game up until the last snap, when he was replaced by third-string quarterback Craig Nall. Pederson was placed on injured reserve on October 7, ending his season. He retired in March 2005 to become a head coach at Calvary Baptist Academy.
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 held 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 his first season in 2005, the Cavaliers went 5–6 and lost in the first round of the state playoffs. In 2007, he led the Cavaliers to the semi-finals and to their first District Title in 2007.
On January 29, 2009, Pederson was hired as the offensive quality control coach for the Philadelphia Eagles, reuniting him with his former head coach, Andy Reid. He was promoted to quarterbacks coach on February 8, 2011, replacing James Urban, who was promoted to assistant offensive coordinator.
On January 11, 2013, Pederson followed Andy Reid to the Kansas City Chiefs to serve as offensive coordinator.
On January 18, 2016, the Philadelphia Eagles hired Pederson as their new head coach, replacing Chip Kelly. Despite having Sam Bradford on the roster as the starting quarterback, the Eagles drafted Carson Wentz with the second overall pick in 2016, similar to what the team did in 1999 by drafting Donovan McNabb when Pederson was the starting quarterback. Right before the 2016 season began, Bradford was traded to the Minnesota Vikings and Wentz was named the starting quarterback as a rookie. Pederson and Wentz won their first three NFL games together, but finished the season 7–9, missing the playoffs.
Pederson was born to Teri (née Boykin) and Gordon "Gordy" Pederson (1939—2016) on January 31, 1968, in Bellingham, Washington. Pederson and his wife Jeannie have three sons.