The Peach Beam is an upgraded version of the Star Beam featured in Paper Mario. This was the only ability that could nullify and counter the power of the Star Rod when enhanced by Bowser and Kammy Koopa's special battle arena.
The Peach Beam in use.
During the final battle, Mario attempted to use the Star Beam on Bowser in order to cancel out the power of the enhanced Star Rod, but due to Kammy's specially designed arena, even the combined essences of the Star Spirits were unable to reduce Bowser's strength. After this unsuccessful attempt, Princess Peach, with some timely advice from the Star Kid, Twink, made a wish to grant more power to the Star Spirits. The power of Peach's wish was so strong the Star Beam was upgraded into the Peach Beam, which had the ability to strip the Star Rod of its powers. When the Peach Beam was used during the battle, Twink would add his power to that of the Star Spirits, along with the power of Peach's wish and the hopes of the entire Mushroom Kingdom.