Pegnose Pete is a villain and major character in Escape from Monkey Island. A career criminal, at the time the game is set Pegnose is wanted in connection with approximately three hundred Lucre Island thefts, and has never been caught. His home is a tiny shack in the heart of the Mysts o' Tyme Marshe. Until Guybrush Threepwood arrives on Lucre Island, Pegnose was the only person capable of navigating around the Marshe. His one weakness was a crippling fear of ducks, rumoured to be due to a duck nibbling off his nose. When Guybrush asks Pegnose whether a duck really did nibble off his nose, Pegnose refuses to answer.
Ozzie Mandrill hires him to rob the Second Bank of Lucre wearing a Guybrush Threepwood mask, thus framing Guybrush. Pegnose steals the Marley Heirlooms, which he hides in his Booty Showcase. Unfortunately for Pegnose, Guybrush is able to track him through the Mysts o' Tyme Marshe and overhear Ozzie and Pegnose plotting. He finds the hidden heirlooms, locates evidence placing Pegnose at the crime scene, and with the help of a nearby duck delivers Pegnose into Inspector Canard's custody.
Soon after his capture Pegnose escapes and joins Ozzie and LeChuck on Mêlée Island, where he captures Elaine Marley. Once Ozzie assembles the Ultimate Insult, however, he feels he no longer needs Pegnose, and tests its power on him. The power of the Ultimate Insult leaves him a shivering, whimpering wretch, and he runs off into the night after being told to "take a long walk off a short pier," never to be seen again.
Pegnose suffers from a specialized case of ornithophobia—specifically, ducks. Even simply saying "Quack" in his presence is enough to scare him. Freddie recounts how he was once attacked by Pegnose, but the villain fled when Freddie raised his WD-32 walking stick, which has an ornamental duck's head on the handle.
Pegnose Pete has a distinctive odour, resembling a concoction of flowers, wood shavings, fish and swamp water.
Guybrush tracks Pegnose Pete down by finding the name he uses with Deadeye Dave (possibly his real name, though this is unconfirmed) and address in the peculiar Rolodex at the Palace of Prostheses. Pete's name varies with each play-through of the game—a rare instance that changes the solution of the puzzle every time the game is played. Examples of his pseudonym include "Jorge H. Christoff", "Ulysses F. Toughguy", or "Sam N. Max".
When robbing the Lucre Island bank, Pegnose exclaims, "Everybody be cool. This is a robbery!" This is a direct reference to the film Pulp Fiction, in which Tim Roth's character, "Pumpkin," speaks the same line when robbing a diner.