He was the only surviving son of Prince Georg Ludwig of Holstein-Gottorp and Sophie Charlotte of Schleswig-Holstein-Sonderburg-Beck.

Frederica's sister, Sophie, was the wife of Crown Prince Paul of Russia (the future Tsar Paul I. Peter and Frederica became the parents of two sons: August (born in 1783) and George (born in 1784).

Fredericka died due to complications from a miscarriage on 24 November 1785 at Vienna, Austria, predeceasing her husband by forty years.

He was appointed Regent of the Duchy of Oldenburg for his incapacitated cousin Peter Frederick William in 1785.

He was succeeded as Grand Duke of Oldenburg by his eldest son, Paul Friedrich August, the first of the House of Holstein-Gottorp to use the elevated style.