Retinal degeneration is characterized by the progressive loss of photoreceptors, and stem cell therapy has become a promising strategy. Many studies have reported that mesenchymal stem cell transplantation can sustain retinal structure and prolong retinal functions based on two mechanisms. One is cell replacement, and the other is the paracrine action of stem cells. Cells from human exfoliated deciduous teeth (SHEDs) show characteristics typical of mesenchymal stem cells. They are derived from the neural crest and are a potential cellular source for neural regeneration in stem cell therapy. In this study, we explored the potential of SHEDs to be induced towards the retinal photoreceptor phenotype and to be sustainable in an animal model of retinal degeneration. A factor-cocktail protocol was used to induce SHEDs towards retinal photoreceptors for 24 days, and the characteristics of the induced cells were identified in terms of morphological changes, biomarker expression and subcellular distribution, and calcium influx. SHEDs were labeled with firefly luciferase for in vivo tracking by bioluminescent imaging and then transplanted into the subretinal space of mice. Our results showed that SHEDs successfully transdifferentiated into photoreceptor-like cells, which displayed neuron-like morphology, and expressed specific genes and proteins associated with retinal precursors, photoreceptor precursors, and mature photoreceptors. In addition, calcium influx was significantly greater in the retinal-induced than in noninduced SHEDs. In vivo tracking confirmed at least 2 weeks of good survival by bioluminescent imaging and 3 months of sustainability of SHEDs by histological analysis. We conclude that SHEDs have the potential to transdifferentiate into retinal photoreceptor-like cells in vitro and maintain good viability in vivo after transplantation into mice with a normal immune system. This demonstrates preliminary success in generating photoreceptor-like cells from SHEDs and applying SHEDs in treating retinal degeneration.