Peggy Shippen Arnold maintained connections that became politically consequential during the Revolution. Her friendship with British officer John André began during the occupation of Philadelphia. After marrying Benedict Arnold in April 1779, she helped provide a channel between him and the British as he negotiated to change sides. The surviving evidence supports her participation, although claims that she alone originated or directed the entire conspiracy go beyond what can be established.

When André's capture exposed the West Point plot in September 1780, Arnold fled to British-held New York. Peggy, left with their infant son, displayed extreme distress before Washington and his aides, who initially regarded her as innocent. She returned to her Philadelphia family, but Pennsylvania authorities ordered her departure. She joined Arnold in New York and went with him to Britain at the end of 1781. A British payment recognized her services in the affair.

Her later life centered on family and household finances. She joined Arnold at Saint John, New Brunswick, in 1787, visited Philadelphia in 1789–1790 and returned to London with her husband in 1791. Of their seven children, five survived infancy. Arnold's commercial ventures produced debts rather than lasting security, and after his death in 1801 she settled debts and the estate while providing for the children. She died in London in 1804. Her adult life combined espionage, exile and family care under financial pressure.