Her father, George of Saxony, had planned a marriage between Mathilde and Archduke Rudolf, Crown Prince of Austria, Hungary, and Bohemia, however Rudolf rejected this arrangement and instead married Princess Stéphanie of Belgium.

Dynastic relations between the Saxon royal family and the Habsburgs were once again strained when Franz Ferdinand chose to marry (morganatically) Sophie, Countess Chotek von Wognin.

Relations between the two nations improved only when Mathilde's younger sister Maria Josepha married her second cousin, Archduke Otto Franz of Austria.

Mathilde became embittered by these rejections and turned critical and waspish; she also turned to alcohol to ease her unhappiness, acquiring the nickname "Schnapps-Mathilde" for obvious reasons.

Some of her paintings, mainly landscapes and scenes of court life in Pillnitz, were made into prints.