The band is known for their slow-paced songs, often discussing themes of childhood or young adulthood. Dawson's distinctive, childlike voice contributes to their distinctive sound.
Adam Green and Kimya Dawson met at Exile on Main Street Records in Mount Kisco, New York and began working together. Along with some of Adam's friends they put out a CDR album called FER THE KIDS before Kimya moved to Port Townsend, Washington. In early 1999 Adam joined her there and the Moldy Peaches were formed. The band returned to NYC as a 4 piece later in the year. They became active on the NYC Anti-folk scene, playing at the Sidewalk Cafe before the band broke up. Kimya and Adam both recorded solo albums. The band reformed in August 2000 with Chris Barron of the Spin Doctors on lead guitar, Brian Piltin on bass guitar, and Strictly Beats (Brent Cole) on drums. A new 11 song album was recorded, which led to a deal with Rough Trade in the UK. They gained recognition after their initial 7" 'Who's Got the Crack" was named 'Single of the Week' in NME. Rough Trade released the album The Moldy Peaches in 2001. Released in the U.S. on September 11, 2001, it contained the song "NYC Is Like a Graveyard". The band expanded to a six-piece, with guitarists Jack Dishel and Aaron Wilkinson, bass player Steven Mertens, and drummer Strictly Beats, augmenting the original duo of Kimya and Adam. They toured internationally with The Strokes with whom they shared record label and management.
Aaron Wilkinson left the band and was replaced by Toby Goodshank. Wilkinson died from an overdose in July 2003. The Strokes dedicated their album Room on Fire to his memory.
In 2003 a second album Moldy Peaches 2000 was released, a double-CD compilation of various scraps and live recordings.
After an extensive US headlining tour in the winter of 2003, the band went into hiatus in early 2004. However, the band reunited in late 2004 for a one-off show to benefit Accidental CDs, Records and Tapes, a hole-in-the-wall record store on Ave A in NYC. That store was an early supporter of the band and helped hook them up with the gig that ultimately got them their record deal. Both central members embarked on solo careers, and supposedly have an agreement in place not to play Moldy Peaches songs during solo performances, although Adam has been known to break this rule having performed "Who's Got the Crack" with Carl Barat and Pete Doherty of The Libertines.
On December 2, 2007, Dawson and Green played an impromptu set together at Los Angeles' The Smell to end a show where Dawson was headlining. They changed the lyrics of the song "Who's Got The Crack" to "Who's Got The Blues". On December 3, 2007 the Moldy Peaches played at the Juno film premiere.
The band was booked to appear on the Conan O'Brien television show on January 14, 2008, but they canceled because of the writer's strike. Kimya has said that she is not keen to reform the band at present. However, Dawson and Green did appear together on the NPR radio show The Bryant Park Project on January 16, 2008, and appeared on television show The View on January 21, 2008.
Subsequent to the success of the Juno soundtrack, which hit #1 on the Billboard 200 on its third week of physical release, the song "Anyone Else but You" was released as a UK single on February 25, 2008.