Peter Guidi was born in Glasgow on September 14, 1949, to Italian immigrant parents who ran a restaurant; his father was an amateur clarinetist who played along with jazz records at home, and the family later relocated to Jersey, in the Channel Islands, where Guidi heard military bands play Count Basie and Glenn Miller repertoire in the parks and got his first taste of playing in pub jam sessions. Self-taught, he started out on clarinet and tenor saxophone before traveling to Milan, where he worked six nights a week playing popular music in a salon orchestra and used his breaks to practice jazz in secret, teaching himself flute and alto saxophone along the way.

Guidi's Italian period is independently confirmed at the Discogs credit level. In 1976 he recorded soprano saxophone on Tullio De Piscopo's jazz-rock album Sotto E 'Ncoppa, credited to the Tullio De Piscopo Revolt Group. The following year he joined pianist Guido Manusardi's quartet, with bassist Lucio Terzano and drummer Gianni Cazzola; the group played the Jazz Jamboree festival in Warsaw in October 1977 (issued on the various-artists LP Jazz Jamboree 77 Vol. 1) and recorded Namymanu (1978) there with alto saxophonist Zbigniew Namysłowski. Guidi returned to the same quartet for Symbiosis (1980), a two-record set otherwise built around Manusardi's duo recordings with bassist Red Mitchell. He also performed at major Italian festivals, including Umbria Jazz, the Aosta Jazz Festival, the Jazz Festival of Pescara and the Padova Porsche Jazz Festival.

From Italy, Guidi toured with drummer Roberto Haliffi and pianist Sonny Taylor's band, a route that eventually took him to Amsterdam, and he spent time living in New York and Paris before settling permanently in Amsterdam in the early 1980s. His discography shifts accordingly: from 1981 on, his Discogs-verified sideman credits are almost entirely with Dutch artists, including pianist René van Helsdingen's Helsdingen Quartet (Motivation, 1981), the group Latul (1981), the Superlights Quintet with singer Obie Jessie (1982), singer Floor van Zutphen (Play On, 1983), singer-songwriter Jaap Nootberg (De Telefoon, 1983), singer Mathilde Santing (Water Under The Bridge, 1984), Helsdingen again (Onyx, 1986), and the Guidelines Quartet featuring singer Kaz Lux (Golden Bluessongs, 1988).

As a leader, Guidi recorded Beautiful Friendship (1990, Timeless Records) with a Dutch quartet of pianist Rob van Bavel, bassist Rob Langereis and drummer Hans van Oosterhout, and A Weaver of Dreams (1993, Timeless Records), billed on its own cover as "Peter Guidi Meets Michel Herr and Riccardo Del Fra" alongside Belgian pianist Michel Herr and Italian bassist Riccardo Del Fra. In 1999 he released Forbidden Flute (Munich Records) as the Peter Guidi Quartet & Trio, a flute-led album mixing quartet and trio configurations across its eleven tracks.

Guidi's second career, as a jazz educator, became his most consequential. From 1988 he headed the jazz department of the Muziekschool Amsterdam, building a ladder of youth big bands, including Jazz Kidz, Jazz Juniors, Jazz Generation, the Jazzmania Big Band and the Jazz Focus Big Band, and co-founding the Junior Jazz College with the Amsterdam Conservatory. Under his direction, these ensembles won a total of 87 prizes in national and international competitions. In 2008 he co-founded the Nationaal Jeugd Jazz Orkest (Netherlands National Youth Jazz Orchestra), a biennial ensemble drawn from the country's best players under 26, and led its inaugural 2009 edition. In 2010 he was appointed a Knight in the Order of Orange-Nassau (Ridder in de Orde van Oranje-Nassau) for his pioneering work in Dutch jazz education. He also authored an instructional method, The Jazz Flute (Molenaar Edition).

Guidi died in Amsterdam on April 17, 2018, at the age of 68, following a brief illness from Creutzfeldt-Jakob disease. A 2022 archival box set marking the 30th anniversary of the Dutch VPRO radio program Sesjun, 30 Jaar Sesjun, includes a Jazz Orchestra of the Concertgebouw performance credited jointly to Guidi and fellow Dutch-scene musicians Tineke Postma, Joris Roelofs, Rita Reys, Rein de Graaff and The Four Freshmen. A book compiled by his friend and editor Ken Wilkie, Peter Guidi In His Own Write, was published by the Peter Guidi Foundation in 2021.

Guidi's playing life was split cleanly between two scenes and two roles. His Italian years, running from the early-to-mid 1970s (a working stint in a Milan salon orchestra, followed by 1976-1980 recording credits with the Tullio De Piscopo Revolt Group and the Guido Manusardi Quartet) into the early 1980s, placed him inside a jazz-rock and post-bop quartet tradition, playing soprano saxophone in a working Italian rhythm section before he relocated permanently to the Netherlands. His four decades in Amsterdam afterward were built on a mainstream, standards-based book (documented on Beautiful Friendship, A Weaver of Dreams and Forbidden Flute) centered on flute, alto flute and bass flute alongside saxophone, and, in parallel, on large-ensemble jazz education: the big-band format he built for the Jazzmania Big Band, the Jazz Focus Big Band and the Nationaal Jeugd Jazz Orkest became his primary vehicle for the last three decades of his career, extending the same working big-band tradition he had played in as a young sideman to successive generations of Dutch student musicians.