Matrimonial negotiations
Margaret heavily participated in the marriage negotiations of her nieces, including Isabella's. In 1509, Isabella's grandfather Emperor Maximilian proposed Henry of Navarre, son of John III, as a possible spouse, but the proposition was presumably dismissed by Margaret. By 1510, there were discussions about Isabel’s possible marriage to Charles II, Duke of Guelders, son of Adolf, Duke of Guelders. However, both Margaret and Maximilian harbored reservations about sending the young princess to Guelders, questioning the match's prestige. The Lord of Guelders held a lower rank as a duke, and their family's objective was to wed their daughters into royal houses.
Isabella's fortune, her succession rights, and her connections made her a valuable pawn in the royal marriage market. In 1513, Copenhagen hosted negotiations for the topic of the new King Christian II's marriage, leading to an agreement to pursue one of Philip the Beautiful's daughters. This alliance promised strategic advantages, creating kinship with the emperor and making King Christian the brother-in-law of Archduke Charles, a powerful figure in key Dutch cities. Furthermore, Habsburg-Austrian princesses were known for substantial dowries. King Christian enlisted the help of his uncle, Frederick III, Elector of Saxony, who, well-connected with the Emperor, inquired about suitable matches at the Imperial Court. In late October and early November, a national assembly in Viborg revisited the matrimonial issue, resolving to send an embassy to Emperor Maximilian for the formal proposal of Archduchess Isabella's hand. Bishop Gottschalk von Ahlefeldt, alongside Councilors Mogens Gjø and Albert Jepsen Ravensberg, was chosen to lead this envoy.
The king of Denmark had first intended to marry Isabella's eldest sister Eleanor of Austria, but the Habsburgs considered Eleanor too valuable for the throne of Denmark, because as the eldest sister, there was a likelihood that her descendants may succeed. Therefore, Isabella was selected for the Danish king. The Emperor expressed approval for the potential alliance with Denmark, a sentiment that found favor in the Low Countries. This alliance was viewed as a strategic opportunity to enhance trade access to the Baltic for merchants from Bruges and Amsterdam.
The envoyship reached the imperial court in Linz in early April, engaging in month-long negotiations culminating in the signing of a marriage contract on 29 April 1514. The substantial dowry amounted to 250,000 Rhenish gulden, approximately equal to 800 million DKK today (about 118 million USD), with contributions from Spain and the Burgundian territories. Princess Isabella was also assured an annual income of 25,000 Rhenish gulden.
On 11 July 1514, one week short of her 13th birthday, Isabella was married by proxy to King Christian II of Denmark with Emperor Maximilian I, her grandfather, standing in for the king. The Bishop of Cambrai, Jacob van Croÿ, presided over the wedding which was conducted at the Brussels Palace.
She remained in the Netherlands, but is said to have fallen in love with her spouse at the sight of his painting, and asked to be taken to Denmark. A year after the wedding, the Archbishop of Nidaros, Erik Valkendorf, was sent to escort her to Copenhagen. The Danish fleet arrived in Veere, Zeeland on 1 July 1515, and later than month, a tearful Isabella departed on 16 July 1515. The fleet encountered a violent tempest, that dispersed the Danish convoy along the shores of Jutland. The vessel carrying the Queen narrowly averted shipwreck, and upon safely reaching Helsingør in the start of August, she penned a poignant letter to the Margaret: "Madame, if I could choose for myself, I should be with you now; for to be parted from you is the most grievous thing in the world to me". Isabella and Christian had their initial encounter at Hvidøre, Christian II's summer residence, where he greeted her with an elaborate entourage of over 1000 individuals.
The marriage was ratified on 12 August 1515, when she was 14 years old.