This paper studies the problem of load-balancing the demand for content in a peer-to-peer network across heterogeneous peer nodes that hold replicas of the content. Previous decentralized load balancing techniques in distributed systems base their decisions on periodic updates containing information about load or available capacity observed at the serving entities. We show that these techniques do not work well in the peer-to-peer context; either they do not address peer node heterogeneity, or they suffer from significant load oscillations. We propose a new decentralized algorithm, Max-Cap, based on the maximum inherent capacities of the replica nodes and show that unlike previous algorithms, it is not tied to the timeliness or frequency of updates. Yet, Max-Cap can handle the heterogeneity of a peer-to-peer environment without suffering from load oscillations.