Caroline Peters studied from 1991 to 1995 at the Saarland University of Music and Performing Arts under Detlef Jacobsen, a close collaborator and confidant of George Tabori. The distinct theatrical model of thought invented there within the circle at Porzellangasse strongly influenced his teaching. After completing her studies, she joined the Schaubühne as a newcomer under Andrea Breth. Following that, she worked as a freelance artist on her own projects at Podewil Berlin, Theaterhaus Gessnerallee and Kampnagel. During this time, she met René Pollesch and followed him to the Deutsches Schauspielhaus in Hamburg, and later to the Volksbühne in Berlin and the Burgtheater in Vienna. She was a member of the ensemble there from 2004 to 2022. There, she worked with Pollesch, Simon Stone, Nicolas Stemann, Barbara Frey and many others. For her work there, she received the Nestroy Theatre Prize twice and was twice named Actress of the Year by the trade journal „Theater heute“.
After a two-year break spent filming, she is engaged at the Burgtheater again under Stefan Bachmann.
She gained teaching experience at the Theatre Academy of Hamburg, where she gave a masterclass in 2012 for students shortly before graduation.