He was the son of Henry I, the Admirable and his wife Agnes, née Countess of Meissen. Ernest originally intended to follow a spiritual career, but after his father"s death, he and his brothers Henry II and William jointly ruled the principality.
Henry the Admirable founded the Principality of Grubenhagen in 1291, after the Guelph princes had divided their inheritance. Grubenhagen was rather smaller than the other Guelph principalities. Ernest received the area around Einbeck, Grubenhagen Castle and Osterode.
The towns of Duderstadt, Osterode and Einbeck were ruled jointly.
