"This is a player that Preki has been wanting for some time," said director of soccer Mo Johnston of the two-time (2003-04) national champion with Indiana who had played the last four seasons for the Rapids. "We're looking forward to bringing him into camp and getting him working with the rest of the players."
Peterson, who turns 24 next week, scored eight goals and contributed five assists in 92 league games with the Rapids.
He was the Rapids' first pick in the 2006 SuperDraft.
Competition for playing time and an ACL injury in his right knee limited him to 12 starts (two goals, two assists) last year, and he is still recovering from the injury.