Born at the Tyrolean residence of Innsbruck in 1415, Frederick was the eldest son of the Inner Austrian duke Ernest the Iron, a member of the Leopoldian line of the Habsburg dynasty, and his second wife Cymburgis of Masovia. According to the 1379 Treaty of Neuberg, the Leopoldinian branch ruled over the duchies of Styria, Carinthia and Carniola, or what was referred to as Inner Austria. Only three of Frederick's eight siblings survived childhood: his younger brother Albert (later to be Albert VI, archduke of Austria), and his sisters Margaret (later the electress of Saxony) and Catherine. In 1424, nine-year-old Frederick's father died, making Frederick the duke of Inner Austria, as Frederick V, with his uncle, Duke Frederick IV of Tyrol, acting as regent.
From 1431, Frederick tried to obtain majority (to be declared "of age", and thus allowed to rule) but for several years was denied by his relatives. Finally, in 1435, Albert V, duke of Austria (later Albert II, the king of Germany), awarded him the rule over his Inner Austrian heritage. Almost from the beginning, Frederick's younger brother Albert asserted his rights as a co-ruler, as the beginning of a long rivalry. Already in these years, Frederick had begun to use the symbolic A.E.I.O.U. signature as a kind of motto with various meanings. In 1436 he made a pilgrimage to the Holy Land, accompanied by numerous nobles knighted by the Order of the Holy Sepulchre, which earned him great reputation.
Upon the death of his uncle Duke Frederick IV in 1439, Frederick took over the regency of Tyrol and Further Austria for the duke's heir Sigismund. Again he had to ward off the claims raised by his brother Albert VI; he prevailed by the support of the Tyrolean aristocracy. Likewise he acted as regent for his nephew Ladislaus the Posthumous, son of late King Albert II and his consort Elizabeth of Luxembourg, in the duchy of Austria (Further Austria). (Ladislaus would die before coming of age). Frederick was now the undisputed head of the Habsburg dynasty, though his regency in the lands of the Albertinian Line (Further Austria) was still viewed with suspicion.
As a cousin of late King Albert II, Frederick became a candidate for the imperial election. On 2 February 1440, the prince-electors convened at Frankfurt and unanimously elected him King of the Romans as Frederick IV; his rule was still based on his hereditary lands of Styria, Carinthia and Carniola, or Inner Austria.
In 1442, Frederick allied himself with Rudolf Stüssi, burgomaster of Zurich, against the Old Swiss Confederacy in the Old Zurich War (Alter Zürichkrieg) but lost. In 1448, he entered into the Concordat of Vienna with the Holy See, which remained in force until 1806 and regulated the relationship between the Habsburgs and the Holy See.
In 1452, at the age of 37, Frederick III travelled to Italy to receive his bride and to be crowned Holy Roman Emperor. His fiancée, the 18-year-old infanta Eleanor, daughter of King Edward of Portugal, landed at Livorno (Leghorn) after a 104-day trip. Her dowry would help Frederick alleviate his debts and cement his power. The couple met at Siena on 24 February and proceeded together to Rome. As per tradition, they spent a night outside the walls of Rome before entering the city on 9 March, where Frederick and Pope Nicholas V exchanged friendly greetings. Because the emperor had been unable to retrieve the Iron Crown of Lombardy from the cathedral of Monza where it was kept, nor be crowned King of Italy by the archbishop of Milan (on account of Frederick's dispute with Francesco Sforza, lord of Milan), he convinced the pope to crown him as such with the German crown, which had been brought for the purpose. This coronation took place on the morning of 16 March, in spite of the protests of the Milanese ambassadors, and in the afternoon Frederick and Eleanor were married by the pope. Finally, on 19 March, Frederick and Eleanor were anointed in St Peter's Basilica by the Vice-Chancellor of the Holy Roman Church, Cardinal Francesco Condulmer, and Frederick was then crowned with the Imperial Crown by the pope. Frederick was the last Emperor to be crowned in Rome; his great-grandson Charles V was the last emperor to be crowned, but this was done in Bologna.