Born at the Hofburg Palace in Vienna she was the ninth child of Emperor Leopold I and Eleonore Magdalene of the Palatinate. Shortly before the War of the Spanish Succession, there was the question of the new king of Spain, Philip V, marrying the archduchess, but Louis XIV was opposed to this match for political reasons, and the official reason given was that none of the archduchesses offered pleased his grandson. In 1708, her older sister Archduchess Maria Anna married John V of Portugal; plans for a second union between Austria and Portugal were discussed when Maria Magdalena was proposed as a bride for Infante Francis, Duke of Beja, brother of John V. Negotiations failed in the early stages and, as such, both candidates died unmarried. Again after the war the question of her becoming queen of Spain to replace the now deceased Luisa Maria of Savoy was floated. However, again it came to naught and Philip married Elisabeth Farnese instead.
After the failed marriage, she lived a life of seclusion and remained unmarried and died without issue. She had a close relationship to her niece Maria Theresa, the daughter of her brother Emperor Charles VI and future Empress and also with her sister Archduchess Maria Anna. She died of pneumonia at the age of 54. She was buried at the Imperial Crypts in Vienna.
Generations are numbered by male-line descent from Frederick III, Holy Roman Emperor. Later generations are included although Austrian titles of nobility were abolished and outlawed in 1919.