He was the third but eldest surviving son of Frederick Augustus II, Prince-Elector of Saxony and King of Poland, by his wife, Maria Josepha of Austria.

His mother tried repeatedly to induce him to take monastic vows and renounce his succession rights in favour of his younger brothers, but he refused.

One of his first acts as elector was the dismissal of the extremely unpopular prime minister, the Count Heinrich von Brühl, who had plunged Saxony into crisis, first with his failed economic policy, but particularly by his catastrophic foreign policy, which caused the electorate to become involved in the Seven Years' War.

Also introduced were measures to pare down the expenses of the court, and to simplify administration in accordance with principles of economy.

Most members of his government, such as Thomas von Fritsch of Leipzig, Friedrich Ludwig Wurmb, and Christian Gotthelf Gutschmied had middle-class origins.