Testosterone promotes aggressive behaviour in male vertebrates during the breeding season, but the importance of testosterone in female aggression remains unclear. Testosterone has both beneficial and detrimental effects on behaviour and physiology, prompting the hypothesis that selection favours an association between aggression and testosterone only in certain contexts in which intense or persistent aggression may be beneficial. We tested this hypothesis in a year-round territorial female buff-breasted wrens (Thryothorus leucotis), by exposing free-living females to experimental intrusions in different social (either single female or male, or paired decoys) and seasonal (pre-breeding or breeding) contexts. Females responded more aggressively to intrusions by females and pairs than to males. However, female intrusions elicited stronger responses during pre-breeding, whereas responses to pair intrusions were more intense during breeding. Territorial females had elevated testosterone levels after female intrusions and intermediate levels after pair intrusions during pre-breeding, but the levels of testosterone remained low after these intrusions during breeding. These results demonstrate seasonal differences in circulating testosterone following territorial aggression in female buff-breasted wrens and are suggestive of differences according to social context as well. Context-dependent elevation of testosterone implies that selection acts directly on female vertebrates to shape patterns of testosterone secretion.