A stylish finish from teenager Tommy Rowe was enough for the Hatters to claim the win which denied Posh and MK Dons the chance to win promotion on the day.
Jamie Day headed a Liam Dickinson’s effort off the home goal line in the first-half and after that County’s John Ruddy was the busier stopper.
Jason Taylor wasted a great chance before Rowe beat Joe Lewis with a fine left-footed effort in the 58th minute.
Posh tried to fight back with Craig Morgan’s cross headed against the woodwork by Chris Whelpdale and substitute Charlie Lee skying a header.
The loss ended a record equalling 17-match unbeaten run for Posh and it could have been worse as Dickinson missed the simplest of chances.