After a scrappy start, it was Posh who recorded the first effort on goal with Joe Newell's low strike going wide of the far post.
Luke Williams had a similar effort which was dragged wide before Luke Daniels made a decent stop on 18 minute to push over a thunderbolt from Michael Bostwick who let fly from 25-yards after linking well with Newell.
Theo Robinson fired wide from the edge of the box and headed over from a McSheffery free-kick midway through the first half.
Just after the half hour mark, Alnwick grabbed a skidding free-kick from McSheffery at the second attempt.
Five minutes before the interval, the hosts got their noses in front following a scrappy period of play around the Posh box. Zakuani blocked from McSheffery but the ball bounced into the path of striker MADDEN who squeezed his shot under the body of Alnwick from close-range.
Posh made a double change on the hour with David Norris and Aaron Mclean replacing Beautyman and Washington.
Van Veem struck a sweet effort from just inside the box on 65 minutes, but the ball went comfortably wide of Alnwick's left hand post.
McSheffery clipped the top of the crossbar with a diving header at the near post after a fine cross from Van Veem. Bostwick saw a 30-yard effort tipped over the bar by Daniels on 70 minutes.
Bostwick fired wide of the target with a 30-yard free-kick moments later after Lundstram was penalised for handball.
It was 2-0 on 72 minutes and effectively game over as a left-wing cross from McSheffery was guided home at the near post by Theo ROBINSON, his effort clipping the inside of the post before nestling in the net.
Referee Mr Berry puled his calf on 77 minutes which led to a lengthy delay as fourth official Ian Dudley took over in the middle.
Alan Sheehan replaced the injured Zakuani during that break. Daniels made a routine stop to deny Williams after a sharp turn on 83 minutes. Alnwick made a routine stop to deny a Robinson effort as the game moved towards it's conclusion.
Madden fired over at the far post after more questionable Posh defending as the fourth official indicated seven minutes of added time. Deep into stoppage time, Alnwick denied Madden a second with his legs.
Full-time: Scunthorpe United 2-0 Peterborough United
Scunthorpe: Daniels, Canavan (sub Boyce 55min), Madden, Van Veen, Lundstram, Robinson (sub Wootton 90min), McSheffery (sub Syers 85min), Williams, Clarke, Osbourne, Davey. Unused subs: Anyon, Evans, Adelakun, Townsend.
Posh: Alnwick, Smith, Ntlhe, Bostwick, Washington (sub Mclean 60min), Williams, Newell, Santos, Zakuani (sub Sheehan 79min), Anderson, Beautyman (sub Norris 60min). Unused subs: Henry, James, Pearson, Adebayo-Rowling.
Attendance: 4,216 (1,003 Posh fans).