Margaret Ann "Peggy" Luft was born at Ravenswood Hospital and raised in Chicago's Ravenswood and Uptown neighborhoods, in a working-class German-Irish Catholic family. She attended Our Lady of Lourdes grammar school and Immaculata Catholic girls' high school before enrolling at Loyola University, where she earned a bachelor's degree in psychology and spent a year studying abroad in Rome.

After college, Luft took a job as a community outreach worker at Uptown Center Hull House, doing home visits across the neighborhood to organize rent strikes, challenge slumlords, and connect families to Head Start and daycare services. She returned to Loyola for a master's degree in social work, graduating in 1980, then went back to Hull House to develop a women's program — work that repeatedly brought her face to face with domestic violence survivors who had nowhere else to turn.

Accompanying clients to the courthouse at Belmont and Western, Luft found that police and prosecutors offered victims only unenforceable "peace bonds," dismissing abuse as "private family stuff." Connecting with advocates facing the same resistance citywide, she became a founding organizer of the Chicago Metropolitan Battered Women's Network, which helped draft the language of the Illinois Domestic Violence Act of 1982 and pioneered the concept of orders of protection. When enforcement stalled, Luft and fellow advocates pushed police, prosecutors, and judges case by case — ultimately negotiating with Cook County Chief Judge Harry Comerford, amid the Greylord judicial corruption scandal, to establish Chicago's first centralized domestic violence courtroom around 1984. She later served as Director of Uptown Center Hull House.