Hertwig's epithelial root sheath (HERS) is critical for epithelial-mesenchymal interaction (EMI) during tooth root formation. However, the exact roles of HERS in odontogenic differentiation by EMI have not been well characterized, because primary HERS cells are difficult to obtain. Immortalized cell lines constitute crucial scientific tools, while there are few HERS cell lines available. Our previous study has successfully established immortalized HERS cell lines. Here, we confirmed the phenotype of our HERS-H1 by verifying its characteristics and functions in odontogenic differentiation through EMI. The HERS-H1-conditioned medium (CM-H1) effectively enhanced odontogenic differentiation of dental papilla cells (DPCs) in vitro. Furthermore, Smad4 and p-Smad1/5/8 were significantly activated in DPCs treated with CM-H1, and this activation was attenuated by noggin. In vivo, our implanted recombinants of HERS-H1 and DPCs exhibited mineralized tissue formation and expression of Smad4, p-Smad1/5/8, and odontogenic differentiation markers. Our results indicated that HERS-H1 promoted DPCs odontoblastic differentiation via bone morphogenetic protein/Smad signaling. HERS-H1 exhibits relevant key molecular characteristics and constitutes a new biological model for basic research on HERS and the dental EMI during root development and regeneration.