We study the peak effect (PE), i.e., a sharp peak observed in the critical current as a function of the particle density, discovered in transport properties of a driven lattice gas model. We show that the PE corresponds to a first-order phase transition found in the undriven system at equilibrium, which in turn gives rise to an "anomalous" second peak in magnetic hysteresis loops. We also explain the "history" dependent phenomena observed in the PE region by investigating the system characteristic time scales, which diverge at low T and have a broad maximum as a function of the external field around the PE. The model we consider can be related to a coarse grained description of vortex lines in superconductors and we discuss the relations of the PE described here and the one experimentally observed in these systems.