Recognition of the tumor during breast-conserving surgery (BCS) can be very difficult and currently a robust method of margin assessment for the surgical setting is not available. As a result, tumor-positive margins, which require additional treatment, are not found until histopathologic evaluation. With diffuse reflectance spectroscopy (DRS), tissue can be characterized during surgery based on optical parameters that are related to the tissue morphology and composition. Here we investigate which optical parameters are able to detect tumor in an area with a mixture of benign and tumor tissue and hence which parameters are most suitable for intra-operative margin assessment. DRS spectra (400–1600 nm) were obtained from 16 ex vivo lumpectomy specimens from benign, tumor border, and tumor tissue. One mastectomy specimen was used with a custom-made grid for validation purposes. The optical parameter related to the absorption of fat and water (F/W-ratio) in the extended near-infrared wavelength region (~1000–1600 nm) provided the best discrimination between benign and tumor sites resulting in a sensitivity and specificity of 100 % (excluding the border sites). Per patient, the scaled F/W-ratio gradually decreased from grossly benign tissue towards the tumor in 87.5 % of the specimens. In one test case, based on a predefined F/W-ratio for boundary tissue of 0.58, DRS produced a surgical resection plane that nearly overlapped with a 2-mm rim of benign tissue, 2 mm being the most widely accepted definition of a negative margin. The F/W-ratio provided excellent discrimination between sites clearly inside or outside the tumor and was able to detect the border of the tumor in one test case. This work shows the potential for DRS to guide the surgeon during BCS.