Peale's dolphins may feed in groups or alone. It has been hypothesized that this species may tend to feed alone when food is scarce and in groups when food is of abundance. When in groups, L. australis usually exhibits what is called "flower" or "starburst" feeding. They encircle their prey until they form a large group and then they feast. This is mostly done within the kelp beds. When they are sighted eating alone it is usually close to shore. When diving for prey it has been reported that they stay under water from between 10.36 seconds to 1.46 minutes.

Not very many L. australis have been dissected for examining the stomach contents, but known prey species are very extensive all the same.

Foods eaten include: Pleoticus muelleri (Argentine shrimp), squid (Loligo gahi and Illex argentinus), Kingklip fish (Genypterus blacodes),  Argentine hake (Merluccius hubbsi), southern cod (Salilota australis), hagfish (Myxine australis), Pantagonian grenadier (Marcuronus magellanicus), red octopus (Enteroctopus megalocyathus), other species of herring, makarel, capelin, anchovies, crustaceans and whelks (gastropods).

Animal Foods: fish; mollusks; aquatic or marine worms; aquatic crustaceans

Primary Diet: carnivore (Piscivore , Molluscivore )