He was born in Gotha, the fifth child and first son of Frederick I, Duke of Saxe-Gotha-Altenburg and Magdalena Sibylle of Saxe-Weissenfels.

Because he was still under age, a guardianship and co-regency was formed between his uncles, the dukes Bernhard I of Saxe-Meiningen and Heinrich of Saxe-Römhild.

In 1693, after he returned from a journey to Holland and England, he wrote to the emperor for a license of adult age and took independent control of the government of his duchy.

Frederick was a splendor-loving baroque ruler; maintaining his court and standing army, which he had taken over from his father and even expanded, devoured a considerable amount of his income.

He created an orphanage in Altenburg (1715), a workhouse and a lunatic asylum in Kahla (1726), as well as the Magdalenenstift - in honor of his mother and wife (both with the same name) - (1705), an endowment for unmarried noble women.