He was a bastard, the fruit of an illegitimate relation of Rinaldo I d'Este – the only son and heir of the Margrave Azzo VII d'Este – with a Neapolitan laundress. Soon after his birth, Obizzo was expelled from Ferrara with his mother and settled in Ravenna.
For his condition, Obizzo was destined to an obscure future; nevertheless, this situation changed in 1251: his father Rinaldo, a hostage of emperor Frederick II since 1238, was poisoned with his barren wife, Adelaide da Romano. Without any other sons to continue his line, the Margrave Azzo VII saw in Obizzo the only chance of survival of the House of Este and fought for his recognition as his heir. Obizzo was legitimated by the Pope Innocent IV in 1252, shortly after his mother was drowned in the Adriatic.
In 1264 he was proclaimed lifelong ruler of Ferrara, Lord of Modena in 1288 and of Reggio in 1289. His rule marked the end of the communal period in Ferrara and the beginning of the Lordship, which lasted until the 17th century.
He was most likely killed by his son Azzo VIII d'Este without having nominated an heir. Azzo claimed the government as the eldest son (primogeniture) but his brothers Aldobrandino and Francesco made a violent dispute for their rights. Finally, they made a divisionary treaty over the lands: Azzo retained Ferrara, Aldobrandino received Modena and Francesco obtained Reggio Emilia.
Obizzo d'Este is cited in Dante's Inferno and is in the first compartment of the Seventh Circle of Hell for purchasing Ghisola from her brother Venedico Cacciamenico for sexual relations.