In a large bowl use a potato masher to crush the peaches. Stir in lemon juice, sugar, apple pie spice, and lemon peel. Allow to stand at room temperature for 10 minutes, stirring occasionally.
In a small saucepan stir pectin into the water. Bring to boiling over high heat; boil for 1 minute, stirring constantly. Remove from heat.
Quickly stir pectin mixture into peach mixture, stirring about 3 minutes or until sugar is dissolved and mixture is no longer grainy.
Ladle hot jam into half-pint freezer containers, leaving a 1/2-inch headspace. Seal and label. Let stand at room temperature about 24 hours or until set. Store for up to 3 weeks in the refrigerator or for up to 1 year in the freezer.