Duke Otto I was probably born at Kelheim, the son of Count Palatine Otto IV of Wittelsbach and Heilika of Pettendorf-Lengenfeld, a granddaughter of the Hohenstaufen duke Frederick I of Swabia.
He was finally rewarded with the duchy of Bavaria on 16 September 1180 at Altenburg in Thuringia, after the deposition of Duke Henry the Lion.