Otto was a son of Archduke Karl Ludwig of Austria and his wife, Princess Maria Annunziata of Bourbon-Two Sicilies.

Although a newspaper account claimed that Karl Ludwig renounced his rights to the throne that same year (1889) in favour of his eldest son, Franz Ferdinand, that story is not certain.

On the death of Karl Ludwig in May 1896, Otto's brother Franz Ferdinand did indeed become heir presumptive to the Austro-Hungarian throne.

In 1914, Franz Ferdinand was assassinated by the Serbian nationalist terrorist Gavrilo Princip in Sarajevo, and Otto's son Charles became heir presumptive.

In one instance, he was known to have jumped nude from a private dining room in the Hotel Sacher in front of a visiting British peeress.

[2] He was seriously ill, and was nursed by his last mistress, Louise Robinson, using the pseudonym Sister Martha, and by his stepmother Infanta Maria Theresa of Portugal.

He died on 1 November 1906, in the presence of his spiritual adviser, Godfried Marschall (de), the auxiliary bishop of Vienna.

[3] After their father's death, Otto's elder brother Franz Ferdinand automatically became heir-presumptive to the throne under the Habsburg house laws.