He was born in
Modena, the son of Duke
Francesco III d'Este, Duke of Modena and
Charlotte Aglaé d'Orléans, daughter of
Philippe d'Orléans, Duke of Orléans and
Regent of France. He was the couple's fourth child and had an older sister
Maria Teresa and two brothers who died before his birth.
In 1741 he married
Maria Teresa Cybo-Malaspina, by which he annexed the
Duchy of Massa and Carrara to the Este territories. When his parents succeeded as rulers of Modena, he was styled His Royal Highness the Hereditary Prince of Modena (1737–1780) and after 1780, His Royal Highness the Duke of Modena.
Generally appreciated by his subjects (he sometimes spoke in Modenese dialect with them), and continued the reform begun by his father. He built the two bridges at
Rubiera and St. Ambrogio at
Modena on the
Via Emilia, and built new roads connecting to the neighbouring states. In 1785 he founded the Atesine Academy of Fine Arts: during his reign arts and culture flourished, and among his protegées were
Lodovico Ricci and others.
After the death of his wife in 1790, he married
morganatically in 1795 with his long-time mistress Chiara Marini (d. Treviso, 1800), whom he invested with title of Marchioness of
Scandiano (only formally, without any authentic rule over this land).
French invasion forced him to flee to
Venice on 7 May 1796, carrying with him a conspicuous personal asset. Later French soldiers captured him at Venice, robbing 200,000 zecchini from his house. After this episode he moved to
Treviso, where he died in 1803. The peaces of
Treaty of Campo Formio (1797) and
Lunéville had assigned him territories in
Breisgau in exchange of the lost Duchy, but he never took possession of them.
His only legitimate daughter
Maria Beatrice married
Archduke Ferdinand of Austria. Their son
Francis IV regained the Duchy of Modena and Reggio in 1814.