Born in Gresten, he received his classical education in Linz, Upper Austria being his family's home region.
When Ficker entrusted the youthful scholar with the revision of the Carolingian period of Böhmer's "Regesta", he was directing him to a domain in which he was to do much work.
In 1878 he was formally received as academical lecturer into the philosophical faculty of the University of Innsbruck, and between 1880 and 1889 published his edition of the imperial "Regesta" of the Carolingian period.
When Mühlbacher died in Vienna at age 59 of pneumonia, he left the almost completed manuscript of his edition of the charters of Pepin the Short, Carloman I and Charlemagne.
This volume was published posthumously in 1906 (Die Urkunden Pippins, Karlmanns und Karls des Großen, MGH Diplomata Karolinorum I, book in digital form) and is the authoritative edition of the charters of these three kings until today.