She was 77.
Mrs Pegge, who held the MBE, was volunteering in the League of Friends shop to raise funds for the hospital just three days before her unexpected death on Satur-day.
She leaves her husband of 51 years, Eddie, three children and five grandchildren.
Mrs Pegge’s association with Musgrove dated from 1972 – she was chairman of the League’s fundraising committee for seven years, chairman of the executive committee for 17 years and managed its shop for 19 years.
League president Chris Cutting said: “As chairman she became the face of the League of Friends, known to many of the staff and also spreading the message into the wider community.
“She would give talks on the work of the League to many organisations in our community and be an advocate for the latest project.
“A stalwart among the workers, she would often be found in the tea tent in the days when there was a summer fete.
“She was enthusiastic ab-out the League’s float that used to be entered in the Taunton Carnival and ever faithful in the work of the shop, fulfilling her duty just three days before her death.”
Mrs Pegge oversaw the League’s 40th anniversary appeal which raised £150,000 for the neonatal unit and the 50th anniversary appeal to raise £350,000 towards a £1million CT scanner.
She also worked tirelessly in the Trull community as president of the WI, on the fete organising committee and supporting the Music in the Park event.
David Allwright, director of corporate planning and performance at Musgrove, said: “We are very saddened to hear that Margaret has died.
“Through her many years of service to the Musgrove Hospital League of Friends she offered so much energy and commitment to raise funds for the hospital.
“She leaves a very real and lasting legacy in the modern facilities and equipment that individual clinical departments have been able to buy through the dedication and support of the League and their team of volunteers.
“The hospital will always remember her as someone who cared deeply about Mus-grove Park Hospital.”
Mrs Pegge’s funeral is at All Saints Church, Trull, at noon next Monday (January 27).