Buoyed by their surprise victory over leaders Cardiff last week, Posh raced into a two goal lead inside six minutes thanks to Lee Tomlin and Dwight Gayle.
Wanderers midfielder Keith Andrews reduced the arrears from the penalty spot but George Thorne's drive made it 3-1 shortly after half-time.
Another Andrews spot kick prompted Bolton's most promising period of the match but United defenders Mark Little and Gabriel Zakuani got in on the act to apparently make the points safe.
But there was a final twist as Wanderers substitutes Benik Afobe and Martin Petrov netted inside the final six minutes to set up a grandstand finish.
Victory for Barnsley at Millwall and Bristol City's draw at Ipswich means Darren Ferguson's side remain bottom of the table, while Dougie Freedman's Bolton head into Christmas eight points shy of the play-off places in 16th.
A cross-field ball from George Boyd in the second minute skidded through Bolton centre-back Zat Knight on the greasy surface, allowing Tomlin to race clear before cutting back onto his right foot and planting a low shot past Adam Bogdan.
Wanderers goalkeeper Bogdan made a magnificent reflex save to stop Tomlin doubling his tally moments later but the Hungary international could do nothing when Sam Ricketts failed to clear Tommy Rowe's cross and Gayle thrashed home on the half-volley - his fifth goal in four games.
Confidence was understandably coursing through Peterborough and Boyd fizzed an ambitious 35-yard effort narrowly over after Thorne dispossessed Andrews.
In the 15th minute Tomlin went close again, skipping past two challenges before curling against the post from the edge of the box.
Boyd passed up the opportunity to add a third, shooting wide at the end of a mazy run, before Bolton were handed a lifeline in first half stoppage time.
Zakuani was penalised for holding down Ricketts when Butterfield delivered a corner from the right and, despite Chris Eagles volleying the loose ball into the net, referee Nigel Miller pointed to the spot.
Andrews held his nerve, blasting low to the left of Posh goalkeeper Robert Olejnik - a virtual spectator for the opening 45 minutes.
But haphazard defending undid Bolton at the start of the second half, as it had in the first, and after they failed to clear in the 47th minute Thorne swept home from the edge of the area.
Freedman threw on Marvin Sordell and Afobe shortly afterward to bolster his side's attack and the latter helped them reduce the advantage again with 56 minutes played.
A bustling run from Arsenal loanee was ended illegally in the area by Joe Newell and once more Andrews did the honours.
Afobe continued to cause problems for the Peterborough defence but at the other end there remained plenty to encourage the hosts and their two goal lead was restored for a third time.
Tomlin dragged wide after being teed up by strike partner Gayle and, with 21 minutes to go, Little emphatically drove into the top corner at the back post from Newell's left wing cross.
Zakuani's far post header to convert Tomlin's right wing corner appeared to have sealed it but Afobe and Petrov had other ideas.
The former converted his team-mates' 84th minute corner from close range and when Petrov emphatically crashed into the top corner on the angle three minutes later Bolton had got to within touching distance of a point they scarcely deserved.
- Sports & Recreation
- Keith Andrews
- Lee Tomlin
- Martin Petrov