He was a younger son of Christian Albert, Duke of Holstein-Gottorp and Frederikke Amalie of Denmark-Norway, daughter of King Frederick III of Denmark and Norway. Therefore, it was his eldest brother, Frederick IV, Duke of Holstein-Gottorp, who naturally succeeded their father as ruler of the small principality, with Christian August given the tiny fiefdom of Eutin. Additionally, his family managed to have him elected as the Lutheran bishop of Lubeck, which at the time entailed a sovereign princely position in the Holy Roman Empire.
When his eldest brother died, leaving only an underage son (Charles Frederick, Duke of Holstein-Gottorp) as his heir, and his sister-in-law died a few years later, Christian August was installed as administrator and then full regent of their principality of Holstein-Gottorp, which was severely ravaged by the violence of Great Northern War.
Prince Christian August married Albertina Frederica of Baden-Durlach, with whom he had several children. Their son, Adolf Frederick of Eutin, became crown prince of Sweden in 1743, and then ascended the throne of King of Sweden in 1751. Their next son Frederick August of Eutin received the position of bishop of Lubeck, after Adolf Frederick (who held it until going to Sweden), as well as the fiefdom of Eutin. In 1773, Frederick August received Oldenburg and Delmenhorst from their young cousin (and future Tsar of Russia), Paul, Duke of Holstein-Gottorp, thus adding the state of Oldenburg which would become a Grand Duchy much later. The couple's daughter Johanna Elisabeth became a princess of Anhalt through marriage, and mothered Catherine the Great, Empress regnant of Russia.
Christian August was succeeded by his son Adolf Frederick.