AMBN (ameloblastin) is an enamel matrix protein that regulates cell adhesion, proliferation, and differentiation of ameloblasts. In AMBN-deficient mice, ameloblasts are detached from the enamel matrix, continue to proliferate, and form a multiple cell layer; often, odontogenic tumors develop in the maxilla with age. However, the mechanism of AMBN functions in these biological processes remains unclear. By using recombinant AMBN proteins, we found that AMBN had heparin binding domains at the C-terminal half and that these domains were critical for AMBN binding to dental epithelial cells. Overexpression of full-length AMBN protein inhibited proliferation of human ameloblastoma AM-1 cells, but overexpression of heparin binding domain-deficient AMBN protein had no inhibitory effect. In full-length AMBN-overexpressing AM-1 cells, the expression of Msx2, which is involved in the dental epithelial progenitor phenotype, was decreased, whereas the expression of cell proliferation inhibitors p21 and p27 was increased. We also found that the expression of enamelin, a marker of differentiated ameloblasts, was induced, suggesting that AMBN promotes odontogenic tumor differentiation. Thus, our results suggest that AMBN promotes cell binding through the heparin binding sites and plays an important role in preventing odontogenic tumor development by suppressing cell proliferation and maintaining differentiation phenotype through Msx2, p21, and p27.