The production of short-chain fatty acids (SCFAs) through anaerobic fermentation is a significant strategy for the resource utilization of excess sludge (ES). However, the limitations of low temperatures and slow ES hydrolysis rates have resulted in less than optimal volatile fatty acid (VFA) accumulation. This study reports a new method for improving ES low-temperature anaerobic fermentation for VFA production using peracetic acid (PAA) pretreatment and elucidates the underlying mechanisms. The results showed that at 10 °C, PAA significantly enhanced the release of organic matter during ES anaerobic fermentation, increasing the soluble chemical oxygen demand concentration in the fermentation liquid, thereby creating conditions for subsequent acidification processes and VFAs accumulation. When the PAA dosage was 9%, the production of VFAs reached approximately 239.5 mg COD/g volatile suspended solids (VSS), which was 1.47 times that of the control group. Mechanistic analysis revealed that PAA improved sludge hydrolysis and acidification under low-temperature conditions but inhibited VFAs consumption, increased the activity of enzymes related to the hydrolysis and acidification processes, and suppressed the activity of F420, thereby enhancing VFA accumulation. The findings provide an alternative solution for the low-temperature biological resource utilization of ES.