Biochar has significant potential to improve crop performance. This study examined the effect of biochar application on the photosynthesis and yield of peanut crop grown on two soil types. The commercial peanut cultivar Middleton was grown on red ferrosol and redoxi-hydrosol (Queensland, Australia) amended with a peanut shell biochar gradient (0, 0.375, 0.750, 1.50, 3.00 and 6.00%, w/w, equivalent up to 85 t ha(-1)) in a glasshouse pot experiment. Biomass and pod yield, photosynthesis-[CO2] response parameters, leaf characteristics and soil properties (carbon, nitrogen (N) and nutrients) were quantified. Biochar significantly improved peanut biomass and pod yield up to 2- and 3-folds respectively in red ferrosol and redoxi-hydrosol. A modest (but significant) biochar-induced improvement of the maximum electron transport rate and saturating photosynthetic rate was observed for red ferrosol. This response was correlated to increased leaf N and accompanied with improved soil available N and biological N fixation. Biochar application also improved the availability of other soil nutrients, which appeared critical in improving peanut performance, especially on infertile redoxi-hydrosol. Our study suggests that application of peanut shell derived biochar has strong potential to improve peanut yield on red ferrosol and redoxi-hydrosol. Biochar soil amendment can affect leaf N status and photosynthesis, but the effect varied with soil type.