The timing of breeding varies across the broad latitudinal range of Tufted Tit-Tyrant, although there is more information from the southern end of its range. Specimens in breeding condition were collected in Colombia in January (Hilty and Brown 1986). Fledgling are reported from Colombia in March; from Ecuador in January, May, and late November; in Peru from February, April, June, July, and August; and from northwestern Argentina in late November (Fjeldså and Krabbe 1990). In Chile breeding is initiated from August-November (Johnson 1967); in central Chile Tufted Tit-Tyrant is double-brooded, with the first clutch initiated in October and the second clutch in December (Pässler 1922).
The nest of Tufted Tit-Tyrant is a compact cup, placed in a shrub, 1-2 m above the ground, and constructed of root fibers, grass, lichens, and thistle down, and lined with many small feathers (Pässler 1922, Johnson 1967, de la Peña 1987).
The clutch is two; the eggs are yellowish white, and unmarked (Pässler 1922, Johnson 1967). Mean egg dimensions are 15.1 ± 0.12 x 11.8 ± 0.05 mm (n = ?; Johnson 1967).
There is no information on incubation, time to fledging, or parental care.