The Anglo-Saxon Chronicle offers the following account of Ceolwulf:
This year went the army [i.e. the Great Heathen Army] from Lindsey to Repton, and there took up their winter-quarters, drove the king [i.e. of Mercia], Burhred, over sea, when he had reigned about two and twenty winters, and subdued all that land. He then went to Rome, and there remained to the end of his life. And his body lies in the church of Sancta Maria, in the school of the English nation. And the same year they gave Ceolwulf, an unwise king's thane, the Mercian kingdom to hold; and he swore oaths to them, and gave hostages, that it should be ready for them on whatever day they would have it; and he would be ready with himself, and with all those that would remain with him, at the service of the army.
The Chronicle was compiled on the orders of Alfred the Great, king of Wessex, brother-in-law of King Burgred. This account is considered to be biased, and politically motivated, written with a view of strengthening the claims of Alfred and Edward the Elder to the overlordship of Mercia.
On onomastic grounds, Ceolwulf is thought to belong to the C dynasty of Mercian kings, a family which claimed descent from Pybba of Mercia. The C dynasty, beginning with Coenwulf, may have had ties to the ruling family of Hwicce in south-west Mercia.
Ceolwulf's immediate ancestry is unknown, but he is thought to be a descendant of Ceolwulf I through his daughter Ælfflæd. Ælfflæd was first married to Wigmund, son of King Wiglaf, and then to Beorhtfrith, son of King Beorhtwulf. Far from being "an unwise king's thane", it is clear that Ceolwulf was a descendant of previous kings. A number of thanes who witnessed charters under Burgred witnessed charters under Ceolwulf,and his charters were witnessed by Mercian bishops, testifying to his acceptance in Mercia.
Ceolwulf's kingdom is presumed to have been reduced to the northern and western parts of Mercia. He appears to have been active in Wales. Rhodri the Great and his son Gwriad were killed, fighting the English, in 878, and Ceolwulf is presumed to have been the leader of the Mercian army. Anarawd ap Rhodri inflicted a heavy defeat on Mercians at Conway in north Wales in 881. This is described as "God's vengeance for Rhodri". As Ceolwulf disappears from the record at about this time, it may be that he was killed in the defeat. He was certainly dead by 883.
Ceolwulf's coinage appears to be closely related to that of Alfred of Wessex, and it has been suggested on this basis that the two kings co-operated against the Vikings.