Otto III was the only son of Duke Joachim I "the Younger" of Pomerania, ruler of Pomerania-Stettin, and his wife Elizabeth of Brandenburg.
The young Otto, heir of Pomerania-Stettin, was educated at the court of the Elector Frederick II of Brandenburg (1413–1471), his uncle and guardian.
The disputes about the inheritance of Warislaw IX were settled in 1463, with Otto receiving Pomerania-Stargard, the western part of Pomerania.
Mayor Albert Glinde of Stettin is said to have put Otto's helmet and shield in his grave, to indicate the end of his dynasty.
A gentleman from Eickstädt then jumped into the grave and took the helmet and shield out again, with the words "We still have hereditary, born rulers, the Dukes in Wolgast.