It uses an "emotional engine" and a cloud-based artificial intelligence system that allows it to analyse gestures, expressions and voice tones.
The firm said people could communicate with it "just like they would with friends and family" and it could perform various tasks.
It will go on sale to the public next year for 198,000 yen ($1,930; £1,150).
"People describe others as being robots because they have no emotions, no heart," Masayoshi Son, chief executive of Softbank, said at a press conference.
"For the first time in human history, we're giving a robot a heart, emotions."
The firm will deploy prototypes of the robot at two of its stores from Friday, allowing customers to interact with them.
Softbank said it planned to subsequently station Pepper at more of its stores nationwide.Growing market Continue reading the main story “Start Quote
The emotional robot will create a new dimension in our lives and new ways of interacting with technology”End Quote Bruno Maisonnier Alderbaran Robotics
Japan is one of the world's biggest robot markets.
According to some estimates, its overall robotics market was worth about 860bn ($8.4bn; £5bn) yen in 2012.
And with a rapidly ageing population, coupled with a falling birth rate, the demand for robots is expected to increase further.
The growth is expected to come not only from businesses looking to offset labour shortages and rising wage costs, but also from households seeking an alternative to paying for care workers for elderly relatives.
Japanese carmaker Honda has also been developing a household robot, Asimo. US President Barack Obama played football with it during his recent visit to Japan.
Softbank developed Pepper in collaboration with French company Aldebaran Robotics, in which it took a majority stake in 2012.
Bruno Maisonnier, founder and chief executive of Alderbaran said: "The emotional robot will create a new dimension in our lives and new ways of interacting with technology."
"It's just the beginning, but already a promising reality."