SMS Habsburg was the second and final member of the Erzherzog Ferdinand Max class of broadside ironclads built for the Austrian Navy in the 1860s.

The construction of the five ironclad warships of the Drache and Kaiser Max classes in the Austro-Italian ironclad arms race prompted the Austrian government to convene a commission in early 1862 to study future naval development, and crucially, the question of whether the navy should be oriented toward power projection from the Adriatic or purely defensive of the Austrian Littoral.

The commission had deadlocked by April, but the recent Battle of Hampton Roads in the American Civil War—the first engagement between two ironclads—had demonstrated the ascendancy of the new ships and convinced the Reichsrat (Imperial Council) to grant a significant increase for the naval budget, which allowed two new ironclads to be ordered in 1863, which became the Erzherzog Ferdinand Max class.

Tegetthoff received a series of telegrams between the 17 and 19 July notifying him of the Italian attack, which he initially believed to be a feint to draw the Austrian fleet away from its main base at Pola and Venice.

Habsburg was not as heavily engaged in the ensuing melee; she did not attempt to ram any Italian vessels, instead employed converging fire, though without success.

[10] The battle ended after Tegetthoff's flagship, Erzherzog Ferdinand Max, rammed and sank Re d'Italia and heavy Austrian fire destroyed the coastal defense ship Palestro with a magazine explosion.

Persano broke off the engagement, and though his ships still outnumbered the Austrians, he refused to counter-attack with his badly demoralized forces.

The Italian ships never came, and on 12 August, the two countries signed the Armistice of Cormons; this ended the fighting and led to the Treaty of Vienna.

As a result of Austria's defeat, Kaiser Franz Joseph was forced to accede to Hungarian demands for greater autonomy, and the country became Austria-Hungary in the Ausgleich of 1867.

[13] The two halves of the Dual Monarchy held veto power over the other, and Hungarian disinterest in naval expansion led to severely reduced budgets for the fleet.

[15] In 1869, Kaiser Franz Joseph took a tour of the Mediterranean Sea in his imperial yacht Greif; Habsburg was initially not assigned to the squadron that escorted him, but she had to be commissioned to replace Salamander after she developed machinery problems.

The squadron also included Erzherzog Ferdinand Max, the screw corvette Helgoland, and a pair of paddle steamers, which escorted the Kaiser for the trip to Port Said at the mouth of the Suez Canal.

The two ironclads remained in the Mediterranean while the other vessels passed through the Canal into the Red Sea in company with Empress Eugenie of France aboard her own yacht.

[16][17] In January 1870, after repairs to Habsburg were completed, she sailed south to Cattaro Bay to reinforce a group of smaller vessels that had been sent there earlier in 1869 to suppress a rebellion against Austro-Hungarian rule.

[18] At that time, Habsburg was the sole Austro-Hungarian ironclad in active service, the rest having been disarmed and laid up in Pola.

The start of the Franco-Prussian War earlier that summer had prompted the withdrawal of the French garrison that guaranteed Rome's independence.

Italy seemed likely to annex the city from the Papal States, so Franz Joseph decided to attempt to deter an Italian attack on Rome.

[22] In the aftermath of the failed operation in Italy, Habsburg left Naples on 3 September and sailed for Smyrna in the Ottoman Empire.

Over the following months, she embarked on a series of short cruises along the Ottoman coast in company with Dandolo until late November, when the latter vessel left the area.

[23] After Habsburg concluded shooting practice on 24 March, Millosicz transferred to the gunboat Velebich, which had recently arrived in Lissa.

During periods in Smyrna, the ship's crew helped fight fires in the city, and later, assisted with flood recovery efforts.