Chris O'Grady added another as Rotherham ran riot to shock the Posh with three first-half goals.
Mark Robins' side burst out of the blocks and into the lead in the seventh minute.
Derek Holmes raced through on goal, shrugged off the challenge from Shane Blackett and fired the ball under Shwan Jalal.
Peterborough, who had won their opening game of the season 3-0, began to take control with tricky striker Aaron McLean causing numerous problems.
On 18 minutes he shot wide from 20 yards, then seven minutes later he was clean through but took a touch too many and the danger was cleared. Adam Newton and George Boyd then combined to set McLean free, but as he dallied Andy Warrington came out to thwart him.
As play swung up the other end Peter Holmes cut the ball back for O'Grady but his shot was saved.
Then on 33 minutes the same combination unlocked the Posh defence for Rotherham's second.
Peter Holmes played the ball into Derek Holmes on the edge of the box and his lay-off was neatly curled into the bottom corner by O'Grady.
Two minutes later it was 3-0 when Derek Holmes powered home a cross from Peter Holmes.
Josh Low had a good change to pull a goal back moments later for the visitors but he skied it over the crossbar.
Peter Holmes and Andy Todd both went close as Rotherham pressed for a fourth in the second half.
Dean Keates hit a superb driven volley on 68 minutes which was brilliantly saved by Warrington, before McLean got a late reward for his endeavour when he headed past Warrington from eight yards from a Keates corner.
Craig Morgan then had a header cleared as Peterborough attempted in vain to snatch a late point.