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Dougie Cameron's 24th-minute penalty earned Peterhead a place in the First Division play-off final.
Cameron calmly converted his spot-kick after Chris Millar had brought down Martin Wood.
Morton will feel aggrieved at not forcing the game to extra-time after creating numerous chances.
However, they paid for a lack of cutting edge in front of goal, although Peterhead goalkeeper Paul Mathers was in inspired form throughout.
Peterhead manager Iain Stewart: "It's a great day for the club. To beat a side like Morton is fantastic.
"But there's still a long, long way to go if we are to win promotion.
"But we're in there and that's all we can ask for."
Morton manager Jim McInally:
"I've decided to stay on as manager and I'm determined to go up as champions next season."
Peterhead: Mathers, Calvin Shand (Hegarty 55), Cameron, Tully, Perry, Gibson, Sharp (Youngson 85), Buchan, Linn (Bavidge 63), Wood, Nicol. Subs Not Used: Michie, McCafferty.
Booked: Hegarty.
Goals: Cameron 24 pen.
Morton: McGurn, Weatherson, Macgregor, Harding, Greacen, Finlayson (Jason Walker 63), Millar, McClean (McLaren 70), Lilley, McLaughlin, McAlistair. Subs Not Used: Alex Walker, Keenan, Gonet.
Att: 3,717
Ref: C MacKay
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