Born in Wiener Neustadt, Margaret was the fifteenth child and fifth daughter of her parents' sixteen children, from whom eight survived infancy. Since her early childhood, she was deeply influenced by her mother's strict Catholicism.
In 1582 Empress Maria returned to her homeland Spain permanently, taking her youngest surviving child Margaret with her, promised to marry Philip II of Spain, who had lost his fourth wife Anna of Austria in 1580. Margaret finally refused and took the veil under the name of Sister Margaret of the Cross as a Poor Clare nun in the Monastery of Santa Clara de las Descalzas Reales in Madrid, where she died aged sixty-six. Margaret was buried in her convent.