Mutations in Tbx3 are responsible for ulnar-mammary syndrome (UMS), an autosomal dominant disorder affecting limb, tooth, hair, apocrine gland and genital development. Tbx3 is a member of a family of transcription factors that share a highly conserved DNA-binding domain known as the T-domain. UMS-causing mutations in Tbx3 have been found at numerous sites within the TBX3 gene, with many occurring downstream from the N-terminally located T-domain. The occurrence of mutations downstream of the DNA-binding domain raises the possibility that there exist important functional domains in C-terminal portions of the Tbx3 protein that affect its behavior as a transcription factor. To determine if and how such C-terminal mutations affect transcription we have mapped regions that confer transcriptional activity and nuclear localization and characterized the DNA binding properties of Tbx3. We find that Tbx3 binds the canonical Brachyury binding site as a monomer and represses transcription. We show that a key repression domain (RD1) resides in the Tbx3 C-terminus that can function as a portable repression domain. Most UMS-associated C-terminal mutants lack the RD1 and exhibit decreased or loss of transcriptional repression activity. In addition, we identify a domain responsible for nuclear localization of Tbx3 and show that two C-terminal mutants of Tbx3 have increased rates of protein decay. Finally, we show that Tbx3 can immortalize primary embryo fibroblasts and that the RD1 repression domain is required for this activity. Our results identify critical functional domains within the Tbx3 protein and facilitate interpretation of the functional consequences of present and future UMS mutations.