The Dublin writer and director came from a family steeped in theatre. His father, passionate about plays and movies, turned to acting to help him cope with the loss of Peter's brother Frankie aged just 10.
And Peter -- younger brother of Hollywood director Jim -- said his acting group "saved our family."
"In April of 1967 our family was torn apart when Frankie, my 10-year-old brother, died of a brain tumour. No one took it harder than Da.
"He went from being a man who never missed work to a man who never went to work," Peter said.
"Da became an actor because the only other option for him was to give up and die.
"He decided to fulfil his lifelong ambition and he never would have done it if Frankie had lived. It took Frankie's death for him to realise the importance of embracing his dreams."
Peter's father founded the St Laurence O'Toole Players and gave his sons an abiding love of theatre.
Brothers Peter and Jim Sheridan once contemplated robbing a bank to fund the Project Arts Centre, but gave up the idea when the IRA started hitting all their possible bank targets.
A new memoir Break A Leg follows the brothers' battle for funding and their determination to follow their passion for drama despite the lack of money. To fund his theatre projects Peter worked variously as a teacher, bus conductor and journalist.
But the Irish playwright said that he felt discriminated against because of his north inner city background.
And, racked with guilt about his dead brother, Peter regularly turned to alcohol to help him cope.
When his girlfriend Sheila O'Donoghue became pregnant, he proposed to her and it was shortly after they decided to move in together that he suffered the first panic attack.
"That night, we went for a drink in O'Neill's pub on Pearse Street and something happened that almost ended the relationship," he revealed.
"I had a severe panic attack, only I didn't understand what it was. I had suffered my first major panic attack, but I made no connection between that and my drinking. The truth is that I didn't want to. It would take many more years and a lot more heartache before I came to any understanding about that."
After a degree at UCD, Peter became caught up in the energy of revolt after Bloody Sunday and took part in the protest march to the British Embassy in Merrion Square.
He said the deaths of 13 people shot dead by British soldiers in Derry on Bloody Sunday in 1972 was a seminal moment in Ireland's history.
"The anger in the crowd was palpable. We weren't going home until our voice had been heard."
Peter went on to write several acclaimed plays, set up a meeting with Christy Brown that developed into his brother directing the Oscar-winning film My Left Foot, and cast budding actors Liam Neeson, Alan Stanford and Gerard Mannix Flynn
"He (Christy) had the saddest eyes I have ever seen. They were a piercing blue covered in a film of sadness."
In between all that, he was also the subject of an argument between Thin Lizzy frontman Phil Lynott and Bono.
Phil told Peter's sons Rossa and Fiachra that he was a great storyteller and they should be proud of him. But Bono replied: "All the best storytellers are from the northside."
"'Hold on there, I'm from Drimnagh,' Phil said. 'I'm from the southside.'
"Phil Lynott grabbed Bono in a headlock and they started messing about.
"Rossa and Fiachra thought it was the funniest thing they had ever seen."
Break A Leg: A Memoir is published by New Island Books and is out now