Peugeot Sport had been a dominant force in WRC during the mid-1980s Group B era, winning the manufacturers' title in 1985 and 1986 with the Peugeot 205 Turbo 16. After Group B was banned for safety reasons following the fatal accident of Henri Toivonen in 1986, Peugeot shifted resources to rally raid and later sportscar racing, leaving the WRC for more than a decade.
The return to rallying was organised under the direction of Corrado Provera. Peugeot Sport re-entered the WRC in 1999 with the Peugeot 206 WRC, debuting at the Tour de Corse with Francois Delecour as lead driver and Gilles Panizzi and Marcus Gronholm sharing the second car across remaining events.
Marcus Gronholm gave the Peugeot 206 WRC its first victory at Rally Sweden in 2000 and followed up with wins in New Zealand, Finland, and Australia to claim the drivers' championship. Gilles Panizzi won in Corsica and San Remo. Peugeot secured the manufacturers' title that year, completing a dominant season.
Didier Auriol joined the team for 2001, replacing Delecour. Harri Rovanpera also drove additional cars on selected events. Rovanpera won in Sweden, Auriol won in Spain, Gronholm took victories in Finland, Australia, and Great Britain, and Panizzi won in Italy. Despite Gronholm finishing only fourth in the drivers' standings, Peugeot retained the manufacturers' championship.
Richard Burns, the 2001 world champion, joined from Subaru for 2002. Gronholm won in Sweden, Cyprus, Finland, New Zealand, and Australia to claim his second drivers' title. Panizzi added wins in France, Spain, and Italy. Though Gronholm and Burns were disqualified for a technical infringement in Argentina, the season's overall dominance delivered Peugeot a third consecutive manufacturers' crown.
Marlboro joined as title sponsor for 2003. Gronholm won in Sweden, New Zealand, and Argentina; Panizzi added Spain. The team lost the manufacturers' title to Citroen. Richard Burns was ruled out before the final round after suffering a blackout while driving and was replaced by Freddy Loix.
Peugeot introduced the 307 WRC for 2004, based on the 307 coupé cabriolet road car. Harri Rovanpera replaced Loix alongside Gronholm after two rounds. Gronholm managed only one victory, in Finland, and finished fifth in the standings. Peugeot dropped to fourth in the manufacturers' classification.
For 2005, Markko Martin joined from Ford to partner Gronholm. The team took time to find form; Gronholm's first win came in Finland in August. Later in the season, Martin's co-driver Michael Park was killed when their 307 WRC left the road in Great Britain, prompting Martin's withdrawal from the championship. Gronholm added a second win in Japan but finished third in the standings. At the end of 2005, PSA Peugeot Citroen withdrew both of its WRC teams — Peugeot and Citroen — from the championship. Citroen returned in 2007 with a new car; Peugeot did not return to the WRC.
The Peugeot Total WRC programme stands as one of the most successful factory campaigns in WRC history. Three consecutive manufacturers' championships and two drivers' titles for Gronholm across a six-year campaign placed Peugeot among the sport's elite teams of the early 2000s. The 206 WRC in particular is regarded as one of the generation-defining World Rally Cars of its era.