Margaret was the granddaughter of the powerful and ambitious Duke of Burgundy in northeast France, also known as "Charles the Bold," who ruled from 1467 to 1477. His territories comprised not only French lands but much of the Low Countries as well, including the prosperous Flemish cities and the Northern Netherlands. Charles was married three times, but there was no male heir to the Burgundian lands, only one daughter from his second marriage. It was thus important that the duke seek a favorable marriage alliance for his daughter, Mary of Burgundy. The result was a union in 1477 (which Charles didn't live to see) between Mary and Archduke Maximilian of Austria, son of the Holy Roman Emperor Frederick III. However, when Charles the Bold was killed in 1477 while fighting against the Swiss near the town of Nancy, the duchy of Burgundy was claimed by the King of France, Louis XI. Mary of Burgundy found herself facing opposition from every side: the French king, disgruntled town councils, and Dutch nobles who had deeply resented her father's heavy-handed rule.
The revolt by local notables in the provinces of Flanders and Brabant, especially by leading townsmen in the city of Ghent, forced Mary to concede a special charter called the Grand Privilege of 1477. This document gave the States General, the legislative body of the territories of the French-speaking Burgundian Netherlands the right to assemble on their own initiative and curbed the power of the ruler to raise taxes or gather troops without the consent of the constituent provinces. Later that same year, Mary was obliged to grant a similar charter to the Dutch-speaking northern provinces of Holland and Zeeland.
Margaret of Austria was born in the midst of these political difficulties. When her mother Mary died at the age of twenty-four in 1482, her father Maximilian served as regent for her young brother