Peel attempted a Back Double Full-Full in the Super Final where she over-rotated and then back-slapped on her landing scoring 55.34.
Hanna Huskova of Belarus took the gold medal with a score of 96.14, ahead of Chinese duo Xin Zhang (95.52) and Fanyu Kong (70.41).
“My goal was to make the top six, the Super Final, and I did that,” Peel said.
“We did our best out there. I had a huge group of supporters in the crowd so I was definitely feeling the love.
In difficult conditions the 2015 World Champion had trouble picking the wind all night.
“I was a bit slow on the first two jumps, I just squeaked out the second jump which I might not have done if I wasn’t in an Olympic Final.
“I took a step up to get a bit quicker for the final jump and got an extra 4km when we were hoping for 1.5km.
“I did what I could.”
Earlier, the dual Olympian moved through to Final 2 with a score of 85.05 for her Back Full-Full.
She then progressed to the Super Final with a Back Full Double-Full that scored 85.65 to head into the final six as the third ranked athlete.
Teammate Danielle Scott, needing to be in the top nine to progress from Final 1 to Final 2, backslapped while attempting a Back Full-Full.
The 2017 World Championship silver medallist scored 57.01 to finish the competition in 12th.
The duo had progressed through yesterday’s qualifications to make the final 12, while five-time Olympian Lydia Lassila and Samantha Wells missed the Finals finishing 14th and 17th.
Australia had won an aerials medal at each of the past four Winter Olympic Games with Alisa Camplin winning gold and bronze in 2002 and 2006, and Lydia Lassila winning gold and bronze in 2010 and 2014.