He was born in Bernburg, the eldest son of Victor Amadeus, Prince of Anhalt-Bernburg, by his wife Elizabeth of Palatinate-Zweibrücken, daughter of Frederick, Count Palatine of Zweibrücken.

In Bernburg on 25 June 1692 Karl Frederick married his cousin Sophie Albertine (b. Sonnenwalde, 2 October 1672 - d. Bernburg, 12 June 1708), daughter of George Frederick, Count of Solms-Sonnenwalde, by his wife Anna Sophia of Anhalt-Bernburg (sister of his father Victor Amadeus, and daughter of Christian II, Prince of Anhalt-Bernburg).

They had six children: From 1711 Karl Frederick began to live with Wilhelmine Charlotte Nüssler (b. Harzgerode, 10 May 1683 - d. Gernrode, 30 May 1740), the daughter of a non-noble chancery counselor.

When Prince Victor Amadeus learned of his son's actions, he wrote to the Emperor on 15 November 1715 to prevent the elevation, and added a codicil to his testament dated 13 July 1716 denying the children of the union any succession rights.

Nevertheless, after his father died in 1718, Karl Frederick obtained from the Emperor a patent to elevate his wife to the title Countess of Ballenstedt (German: Gräfin von Ballenstedt) on 19 December 1719, and their two sons to the rank of Imperial Counts of Bährnfeld (German: Reichsgrafen von Bährnfeld) on 12 June 1723; this, however, without prejudice of the rights of the agnates.