The effect of using tagatose as a substitute for sucrose in sponge cake on the microstructure and viscosity properties of batter and the texture, color and sensory quality of sponge cake was studied by optical microscopy, a rotary rheometer, a texture analyzer and a color difference meter. The results showed that the relative density of batter gradually increased (P < 0.05), and the viscosity gradually decreased (P < 0.05); the hardness of cake gradually increased (P < 0.05) with increasing level of tagatose replacement. Compared with the control group, 50% tagatose substitution resulted in no significant change in the foaming capacity or foam stability of whole liquid egg or the specific volume or elasticity of sponge cake (P > 0.05). In addition, with increasing level of tagatose replacement, the brightness of cake crust and crumb decreased, and the redness and yellowness increased (P < 0.05), indicating increased extent of Maillard reaction. In terms of sensory properties, the addition of tagatose did not significantly (P > 0.05) reduce the acceptability of sponge cake. Considering batter properties and baking quality, the replacement level of tagatose should not exceed 50%.