Developer Wenyuan Shi from the University of California, Los Angeles school of dentistry, said the confectionery treat contains Glycyrrhiza uralensis, a liquorice root extract that destroys the bacteria responsible for dental cavities.
Only 15 milligrams of licorice powder per lollipop eliminates 99.9 percent of Streptococcus mutans, a common bacterium that could release harmful cavity-causing acids.
Before cavities appear, bacteria in the mouth produce acids that create holes in the top layer of the teeth.
Streptococcus mutans is particularly harmful and causes a large percentage of these holes, Shi said.
Importantly, the extract does not kill the other bacteria in the mouth necessary for good oral health, Shi claims.
Shi first began the project in 2006, while looking for a nutraceutical and non-pharmaceutical approach to plaque removal, partly because nutritional supplements do not require the same level of FDA approval as chemical drugs, he said.
He then collaborated with scientists in China to explore traditional herbs, eventually discovering that liquorice root was one of the most effective.
"This was particularly charming because in both Chinese in Western cultures people chew it for the taste," he said.
"But it also has a lot of good health benefits - it stimulates saliva flow, has anti-bacterial properties and keeps bacteria from adhering to your teeth."
The lollipop was chosen as the ideal vessel for the ingredient, as consumers generally suck the product slowly which keeps the liquorice extract in the mouth for longer.
"This means it keeps the active ingredients in contact with the organisms in your mouth long enough for them to work," scientists said.
"As the lollipop dissolves in your saliva, we end up with the right concentration of the herbs to kill harmful bacteria."
The product is flavoured with orange extracts for a pleasant taste, and is currently being sold to dentists in Japan and Europe to test on patients at high risk of tooth decay, the developers said.
The creation is likely to be noted with interest by manufacturers across Western countries, with tooth-friendly products emerging as a new area of potential in the functional confectionery market.
Other companies that have developed tooth-friendly products include Barry Callebaut, which last year launched a chocolate bar containing isomaltulose, a natural constituent of honey and sugar cane.
Although there are no specific figures available for sales of tooth-friendly products, sales of sugar-free confectionery and chocolate have increased by 26 per cent to £229 million (€329 million) at the retail level in the last year alone, according to market analyst Euromonitor.
Sugar-free confectionery accounts for an 18 per cent share of the Spanish confectionery market, followed closely by Finland, Norway and Germany, which all show similar statistics.