The transcriptional repressor Tbx3 is involved in lineage specification in several tissues during embryonic development. Germ-line mutations in the Tbx3 gene give rise to Ulnar-Mammary Syndrome (comprising reduced breast development) and Tbx3 is required for mammary epithelial cell identity in the embryo. Notably Tbx3 has been implicated in breast cancer, which develops in adult mammary epithelium, but the role of Tbx3 in distinct cell types of the adult mammary gland has not yet been characterized. Using a fluorescent reporter knock-in mouse, we show that in adult virgin mice Tbx3 is highly expressed in luminal cells that express hormone receptors, and not in luminal cells of the alveolar lineage (cells primed for milk production). Flow cytometry identified Tbx3 expression already in progenitor cells of the hormone-sensing lineage and co-immunofluorescence confirmed a strict correlation between estrogen receptor (ER) and Tbx3 expression in situ. Using in vivo reconstitution assays we demonstrate that Tbx3 is functionally relevant for this lineage because knockdown of Tbx3 in primary mammary epithelial cells prevented the formation of ER+ cells, but not luminal ER- or basal cells. Interestingly, genes that are repressed by Tbx3 in other cell types, such as E-cadherin, are not repressed in hormone-sensing cells, highlighting that transcriptional targets of Tbx3 are cell type specific. In summary, we provide the first analysis of Tbx3 expression in the adult mammary gland at a single cell level and show that Tbx3 is important for the generation of hormone-sensing cells.