The assassination in 1052 of her father, Boniface of Canossa, and the deaths of her older brother and sister left her the sole surviving heir to the extensive holdings of the House of Attoni, founded by her grandfather Atto Adalbert. Two years later Matilda's mother, Beatrice, married Godfrey, duke of Upper Lorraine, an enemy of the emperor Henry III. Henry seized Beatrice and Matilda as hostages in 1055 and took them to Germany, but the following year he became reconciled with Godfrey and released them a few months before his own death.

When Godfrey died in 1069, Matilda married his son Godfrey the Hunchback, with whom she resided in Lorraine. After the death of their child in infancy, she returned to Italy, reigning with her mother until Beatrice's death in 1076. Matilda's father, for many years a supporter of the German emperors, had moved toward the papal side in the factional struggle dividing Italy, and Matilda remained loyal to the popes. She became a close friend of Pope Gregory VII, lending him important support in his struggle against the emperor Henry IV, and it was at her castle at Canossa that in January 1077 Gregory received the barefoot penance of the Emperor. After Henry's excommunication in 1080, Matilda was intermittently at war with him until his death (1106), sometimes donning armour to lead her troops in person. In 1082 she sent part of the famous treasure of Canossa to Rome to finance the Pope's military operations.

In 1089, at the age of 43, Matilda married the 17-year-old Welf V, duke of Bavaria and Carinthia, a member of the Este family. They separated six years later, Henry IV taking the Este side in the resulting quarrel. Matilda encouraged Henry's son Conrad to rebel against his father in 1093 and seize the crown of Italy. She finally made peace with Henry IV's son and successor, Henry V, in 1110, willing her private territorial possessions to him, although she had already donated them to the papacy, an act that later provoked controversy between papacy and empire.

Buried near Mantua, she was held in such high regard by succeeding popes that her remains were removed to Rome in 1634 by Pope Urban VIII and reinterred in St. Peter's.