In developing teeth, dental epithelial progenitor cells differentiate through sequential and reciprocal interactions with neural-crest-derived mesenchyme. However, the molecular mechanisms involved in cell differentiation are not well understood. Continuously growing teeth are useful in the study of differentiation of dental progenitor cells. In rat lower incisors, ameloblasts originate from the dental epithelial adult stem cell compartment referred to as the 'apical bud'. To elucidate the mechanism of ameloblast differentiation, we designed a primary culture system and confirmed the differentiation of dental epithelial cells through interaction with mesenchymal cells. Cytokeratin was used as a marker for epithelial cells, nerve growth factor receptor p75 for inner enamel epithelial (IEE) cells, and ameloblastin for ameloblasts. The apical bud cells could only differentiate into IEE cells and, within 10 days, into ameloblasts expressing ameloblastin in the presence of dental papilla cells. Interestingly, the IEE cells could proliferate transiently and differentiate into ameloblasts in the presence or absence of dental papilla cells. These results suggest that apical bud cells can enter the ameloblast cell lineage through interaction with mesenchymal cells. IEE cells, on the other hand, are already committed to differentiate into ameloblasts. This culture system is useful in future studies of ameloblast differentiation.