Kathryn A. (Peg) Morton, 51, director of family and community services for the Montgomery County Association for Retarded Citizens, died of cancer Wednesday at her Bethesda home.

Mrs. Morton, whose youngest child is retarded, was an adviser to parents of retarded children and to professionals working in the field of mental retardation.

She wrote numerous articles to promote understanding between professionals and parents and was the coauthor of "A Reader's Guide for Parents of Children with Mental, Physical or Emotional Disturbances," a 1976 annotated bibliography recently updated for republication this year.

She was the key figure in establishing a nonprofit organization to link the handicapped with resources and services here, the information Center for Handicapped Individuals, which she helped found in 1969 as the Information Center for Handicapped Children.

After serving as the center's director for three years, she became a research associate for Closer Look, a national information center for parents of the handicapped.

Mrs. Morton established the organization's newsletter for the handicapped, now called "Report for Closer Look," which has a circulation of 200,000.

Before joining the Montgomery County Association for Retarded Citizens in 1973, she worked for about two years as a research associate for the National Special Education Information Center.

Mrs. Morton also reviewed books on mental retardation for The Washington Post.

She was a member of the National Advisory Commission of the Study on the Classification of Exceptional Children.

Mrs. Morton was born in Wauwatosa, Wis. She earned a bachelor's degree from Wellesley College and a master's degree in English literature from Stanford University. She also attended the University of Wisconsin and the Sorbonne in Paris.

Her marriage to William Gorham ended in divorce.

Survivors include her husband, herbert Morton, of Bethesda; five daughters, Nancy and Sarah Gorham, boh of New York City, Kim Gorham of Rockvill, Jennifer Gorham of New Haven, Conn., and Beckie Gorham of Odessa, Del.,; her mother, Mrs. Charles W. Aring, and a brother, Charles Aring, both of Milwaukee, Wis., and a sister, Nancy A. Graham of Washington.

The family suggests that expressions of sympathy be in the form of contributions to the Kathryn Morton Fund at the Montgomery County Association for Retarded Citizens in Kensington.