Following the parting of ways that occurred between the two cousins Eugène and Armand Peugeot, Eugène utilised the space left in the Beaulieu factory by Armand's departure to Audincourt. It was here that he would construct motorcycles and tricycles.

A first motorcycle, fitted with a Dion Bouton engine mounted perpendicularly to the rear wheel, was presented at the 1898 Paris Exhibition. But it was never manufactured.

The first motorcycles, built in 1898 by Les Fils de Peugeot Frères (Sons of Peugeot Bros), were tricycles. Only the cycle section was made by Peugeot; the entire mechanical assembly, including the 239.5 cc single-cylinder engine, was manufactured by Dion Bouton. Although they were not very practical, these tricycles sold well as a result of their modest price tag. They constituted the first popular motorised vehicle in the last part of the 19th Century.

The first quadricycle (with a saddle) appeared in 1900. With a Peugeot engine, it was more powerful, but also much heavier. In 1901, it was fitted with a cylinder head coolant. The following year, no fewer than six quadricycles — four of which had Peugeot engines — featured in the catalogue, and tricycles no longer appeared.
Constantly increasing in power, but also in terms of weight, quadricycles were no longer very different from small cars. However, they were not very practical, and were difficult to drive and to start. These drawbacks led them to lose popularity in favour of small cars. 1903 was the last year they were produced by Peugeot.

The first motorcycle produced by Peugeot was the "Motobicyclette", a light machine presented at the Paris Exhibition in 1901. It was Peugeot's response to the widely popular Werner. It had a Swiss ZL (Zürcher and Lüthi) 1½ hp (198 cc) engine, which was mounted over the chassis frame in front of the pedal assembly. Transmission was by belt. The cycle section was ultra light,  and was a reinforced bicycle frame. It was only marginally successful in competition with the Werner.

On the first 5 hp motorcycle, sold in 1903, the engine was placed inside the chassis frame, which became the definitive location for the mechanical components and is still so today. Then came the first races. Five Peugeot de 3 ½ hp machines took part in the Paris-Madrid in 1903.

The range broadened and the engines increased in power. The 1910s saw the appearance of twin cylinders, some of which demonstrated their capacities in competition. Peugeot pioneered the double overhead camshaft in both the car and the motorcycle. In 1914, a 500 cc, twin cylinder engine with double camshaft appeared, in the style of the Peugeot Grand Prix models. It was to have been ridden in the French Grand Prix, but the war decided otherwise. It was, however, able to beat the speed record set at 122 km/h. It won many races after the war, mainly ridden by Péan.

In the 1920s, the two-wheeler business became autonomous from the automobile business. In 1926 the Nouvelle Société des Cycles Peugeot was created, which grouped together all motorcycles and bicycles. At the start of the 1930s, the range included popular models in particular. The biggest Peugeot, the    P 107 popularised by the travels of the motorcyclist reporter, Robert Sexé, had only a 350 cc engine. In order to counteract British competition, which offered powerful machines with big engines, Peugeot launched two 500 cc 4-stroke models, the 515, with overhead valves and the 517, with side valves. Presented at the Paris Exhibition in 1933, a year later the 515 beat the world 24 hour record on the Montlhéry circuit, with an average speed of 118.747 km/h. This superb machine - one of Peugeot's most handsome - was to be the last big French motorcycle.

After the Second World War, the difficult economic conditions favoured smaller engines. Peugeot produced popular 125 cc, 2-stroke motorcycles, which became very widespread. The P 55 came out in 1946. This was a single cylinder 125 cc, which copied a pre-war model. An industrial tricycle was derived from it - the Peugeot "tri", a fifties icon which the advertisements rightly stated was the least expensive of the utility vehicles.A simple, economical 175 cc and a 250 cc twin cylinder followed in 1953.

From then on, Peugeot was the French leader in the motorcycle market, ahead of Motobécane and Terrot - although the roles would later be reversed during the 1950s. The 356 TB 125 cc twin cylinder turned out to be Peugeot's swan song during this period. For the motorcycle market was regressing, a victim of the two-pronged attack from the scooter and the popular car.

Of the 300 manufacturers that have made their mark on the history of the French motorcycle, Peugeot is the only survivor, and over the years has acquired many of the great French names, such as Terrot and René Gillet, before succumbing to Japanese domination, like most European companies.

In 1987, the bicycle and motorcycle businesses were separated. The motorcycle business has been renamed Peugeot Motorcycles (PMTC), and Honda holds a 25% stake. Today, Peugeot Motocycles is a wholly-owned subsidiary of the PSA Group, and has been since 1998. The current XPS is a response to the new surge in the 125 cc market that has been triggered by new regulations.