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In 1557 he was secretly married to Philippine Welser, daughter of a patrician from Augsburg, with whom he had several children. The marriage was only accepted by Emperor Ferdinand I in 1559 under the condition of secrecy. The children were to receive the name "of Austria" but would only be entitled to inherit if the House of Habsburg became totally extinct in the male line, and thus the marriage had many qualities of a morganatic marriage. The sons born of this marriage received the title Margrave of Burgau, an ancient Habsburg possession in Further Austria. The younger of the sons, who survived their father, later received the princely title of Fürst zu Burgau.
After his father's death in 1564, Ferdinand became the ruler of Tirol and other Further Austrian possessions under his father's will. However, he remained governor of Bohemia in Prague until 1567 according to the wishes of his brother Maximilian II.
In his own lands, Ferdinand made sure that the Catholic counter-reformation would prevail. He also was instrumental in promoting the Renaissance in central Europe and was an avid collector of art. He accommodated his world-famous collections in a museum built specifically for that purpose, making Ambras Castle Innsbruck the oldest museum in the world, and as the only Renaissance Kunstkammer of its kind to have been preserved at its original location, the Chamber of Art and Curiosities at Ambras Castle Innsbruck represents an unrivalled cultural monument. The collection was started during Ferdinand's time in Bohemia and he subsequently moved it to Tyrol. In particular, the Chamber of Art and Curiosities, the gallery of portraits, and the collection of armor were very expensive, leading Ferdinand to incurred a high level of debt. Part of collections remained in Innsbruck, and part ultimately was moved to the Kunsthistorisches Museum in Vienna.
Archduke Ferdinand died on 24 January 1595. Since his sons from the first marriage were not entitled to the inheritance, and the second produced only surviving daughters, Tirol was reunified with the other Habsburg lands. His daughter from the Mantuan marriage to Anna Caterina (later Anna Juliana) became Holy Roman Empress Anna, consort of Emperor Mathias, who received his Further Austrian inheritance.