There is a magical bag that can be purchased in a few different places, for a few different prices. It allows the storage and retrieval of 19 different dragons at this present time. So, after killing one that you receive a souvenir (the tooth), you can use it and store it, taking it out of your inventory.
Having said that, there are several NPCs that look for the tooth of a particular dragon in your inventory, and they will not check your 'magical bag'. It benefits you to keep one of each, if you can, in your inventory, and store the extras (if you are lucky enough to kill more than one).
Having having said that (lol), there are other NPCs that require 4 of this tooth, and 10 of that one, oh for say, a Dragon Tooth Class Necklace... They don't check teeth held in your inventory, they look at the ones in your bag.
As with most storage items, some NPCs like 'hands on' items, and some like the banking method. Tis for you to learn.