Objective: Lumpectomy, breast conserving tumor excision, is the standard surgical treatment in early stage breast cancer. A common problem with lumpectomy is that the tumor may not be completely excised, and additional surgery becomes necessary. We investigated if a surgical navigation system using intraoperative ultrasound improves the outcomes of lumpectomy and if such a system can be implemented in the clinical environment. Methods: Position sensors were applied on the tumor localization needle, the ultrasound probe, and the cautery, and 3-D navigation views were generated using real-time tracking information. The system was tested against standard wire-localization procedures on phantom breast models by eight surgical residents. Clinical safety and feasibility was tested in six palpable tumor patients undergoing lumpectomy by two experienced surgical oncologists. Results: Navigation resulted in significantly less tissue excised compared to control procedures (10.3 ± 4.4 versus 18.6 ± 8.7 g, p = 0.01) and lower number of tumor-positive margins (1/8 versus 4/8) in the phantom experiments. Excision-tumor distance was also more consistently outside the tumor margins with navigation in phantoms. The navigation system has been successfully integrated in an operating room, and user experience was rated positively by surgical oncologists. Conclusion: Electromagnetic navigation may improve the outcomes of lumpectomy by making the tumor excision more accurate. Significance: Breast cancer is the most common cancer in women, and lumpectomy is its first choice treatment. Therefore, the improvement of lumpectomy outcomes has a significant impact on a large patient population.