Peterson was convicted of first-degree murder in his wife's 2001 death. She was found at the bottom of a bloody staircase in the couple's mansion. Peterson has maintained his wife died in an accidental fall after drinking alcohol and taking Valium.
Prosecutors appealed a 2011 ruling by Superior Court Judge Orlando Hudson that State Bureau of Investigation analyst Duane Deaver misled jurors about the strength of bloodstain evidence in his 2003 trial.
Judge Hudson granted Peterson a new trial, and released him from prison on a $300,000 bond. He has been under house arrest since December 2011.
In its opinion Tuesday, the Court of Appeals said "After careful review, we conclude that the evidence concerning Agent Deaver's qualifications constitutes newly discovered evidence entitling defendant to a new trial. Thus, we affirm the trial court's order."
The state attorney general's office had tried to convince the court that a new trial would be a waste of taxpayer money. They argued that without Deaver's questionable testimony, a jury would still come to the same conclusion -- a guilty verdict.
With Tuesday's ruling, the Durham County District Attorney's office will have to consider giving Peterson a new trial, offering him a plea agreement, or dismissing the case altogether.