He was born at Edirne Palace a son of sultan Mehmed IV (1648 – 87) and Valide Sultan Mah - Para Ummatullah Rabia Gül - Nush, originally named Evemia, who was of Greek Cretan descent. Mustafa II abdicated in favor of his brother Ahmed III (1703 – 30) in 1703.

The most traumatic event of his reign was the loss of Hungary by the Treaty of Karlowitz in 1699. This event marked the beginning of the long decline of the Ottoman Empire.

At the end of his reign, Mustafa II sought to restore power to the Sultanate, which had been an increasingly symbolic position since the middle of the 17th century, when Mehmed IV had signed over his executive powers to the Grand Vizier. Mustafa II's strategy was to create an alternative base of power for himself by making the position of timars, the Ottoman cavalrymen, hereditary and thus loyal to him. The timars, however, were at this point increasingly an obsolete part of the Ottoman military machine. The strategem (called the "Edirne event" by historians) failed, and Mustafa II was deposed in the same year, 1703. He died at Topkapı Palace, Constantinople.

He married twice, to Valide Sultan Saliha Sabkati, mother of Mahmud I, and to Valide Sultan Shehsuvar, mother of Osman III.