Peter Lorre did not receive an Oscar nomination for portraying Dr. Herman Einstein in Arsenic and Old Lace.
Peter Lorre role is that of the drunkard surgeon and partner in crime of Jonathan Brewster who is the one who caused him to look like Boris Karloff. In the theater production of the play Boris Karloff himself played the man who looked like Boris Karloff, it seems perhaps to act as a replacement of sorts, as Massey simply could not replace Karloff as Karloff, when they got another horror icon to play Brewster's partner. Although I have no idea if there was even a thought behind this but having Peter Lorre play the inappropriately named Dr. Einstein was quite a stroke of genius for this film as he fills in the gap that seems might have been created by the lack of Karloff.
Peter Lorre went on to be one of the most often parodied actors particularly in various Warner Brothers cartoons. Peter Lorre here gives basically the Peter Lorre parody before the Peter Lorre parodies, and the simple truth is who better to give a comedic version of a Peter Lorre performance then Peter Lorre himself. Peter Lorre here goes all out Peter Lorre so to speak with the way he is always slinking around screen, always making these slight gestures, having that always slightly nervous quality about him, and of course not in any way trying to adjust his accent here, letting his voice be the Lorre voice of his cartoon iterations.
Of course this type of performance can easily spell doom as it did in 1944 for Bette Davis in Mr. Skeffington, except the differences are that Arsenic and Old Lace is meant to be a comedy and Peter Lorre knows what he is doing. Lorre is terrific in adapting himself to a purely comic performance and is the highlight of the film with his performance. Lorre steals every scene he is in even when he is just in the background through the gestures of unease the makes as the situation slowly becomes more absurd through the film. Even when he is not the focus Lorre still steals the spotlight, as he finds just the perfect tone for his performance.
Lorre work is quite clever in the way he steals each scene he is in by doing what the film itself says he is doing which is underplaying. One of Lorre's best scenes is when Grant's character is going off about how dumb characters won't notice that the killer is coming behind them. Well Grant does a rather big display of acting the best part of the scene is Lorre's perfect comic timing as he shows Einstein's disbelief that Mortimer could be so thick headed. He also is the one who makes Massey work just fine as Jonathan because again what Massey is doing usually is usually rather straight, but what is so funny are the nervous interjections brought by Lorre.
Lorre gives the funniest performance in the film by finding the right balance with his performance unlike Cary Grant who overplays a tad and Raymond Massey who frankly could be a bit more humorous. Lorre though finds a more measured approach and is the funniest person in the film because of it. Lorre knows how to sell the material the best in that he gets all the comedic worth out of Dr. Einstein's actions through the film whether it be his unease at his partner's violent tendencies, his nervous drinking or his futile attempts to quietly warn Mortimer about Jonathan's attentions. Lorre sells every moment just enough to be funny without going over the top.
The role of Dr. Einstein really is not poised to necessarily do all that much in fact he easily could have been overshadowed by the characters who he is usually standing in the shadow of. Lorre never lets that happen though giving a thoroughly enjoyable supporting performance which is quite an interesting performance to from Peter Lorre as he goes for a fully comic performance since often there were light comic touches in his more dramatic performances anyways. Lorre with the chance to go all the way comic proves himself more then capable of taking the next step since he knows how to stay grounded with his character while being very amusing.