Peroxyacetic acid (PAA) oxidant has a broad application prospect to be combined with biochar in the treatment of organic pollutants due to its excellent characteristics of eco-friendly and easy activation. In this study, peanut shell biochar-loaded Co nanoparticles (Co-BC-850) catalysts were prepared through pyrolysis to activate PAA for carbamazepine (CBZ) degradation. The pyrolysis temperature significantly affected the CBZ degradation efficiency of the catalysts. The experimental results revealed that the Co-BC-850 catalyst exhibited the highest CBZ degradation efficiency. Within 20 min, a CBZ degradation rate of 99.9% was achieved with Co-BC-850 concentration of 50 mg/L and PAA concentration of 1 mM. The Co-BC-850/PAA system achieved high degradation performance for CBZ at a pH ranging from 5.0 to 9.0, even in the presence of inorganic anions. The analysis of the Co-BC-850/PAA system revealed a complex interplay of reactive species (RSs). Organic radicals (R-O center dot), singlet oxygen (1O2), and high-valent cobalt species (Co(IV)) collaboratively contributed to CBZ degradation. These findings revealed the intricate mechanism of CBZ degradation via Co-BC-850-activated PAA, thereby elucidating potential degradation pathways. This study demonstrates the promising application of biochar PAA-based AOPs and offers a sustainable and effective solution for the degradation of CBZ and other potential pharmaceutical compounds in water.