Otto III was probably born between 1475 and 1485 as the eldest son of John I and his wife Margaret of Lippe.
In 1533, Otto III appointed two preachers from Lippe, to teach the new faith in the parishes of Rietberg and Neuenkirchen.
On his gravestone in the cloister before the winter refectory a Latin text could be read: Beside it was the grave stone of his first wife: Otto III's first marriage, which was closed before 1515, was with Countess Anna of Sayn (died: 16 January 1523).
With her he had five children: After Anna's death, Otto III married on 26 September 1526 Onna of Esens (died after 1559).
Five years after Otto's death, Balthasar died childless and Onna inherited his land.