The GATA family of transcription factors plays essential roles in the specification and maintenance of differentiated cell types. GATA-3 was identified in a microarray screen of the mouse mammary gland as the most highly expressed transcription factor in the mammary epithelium and is expressed exclusively in the luminal epithelial cell population. Targeted deletion of GATA-3 in mammary glands leads to profound defects in mammary development and inability to specify and maintain the luminal cell fate in the adult mouse. In breast cancer, GATA-3 has emerged as a strong predictor of tumor differentiation, estrogen-receptor status, and clinical outcome. GATA-3 maintains tumor differentiation and suppresses tumor dissemination in a mouse model of breast cancer. This review explores our current understanding of GATA-3 signaling in luminal cell differentiation, both in mammary development and breast cancer.