Welcome to the forum.
Certainly this is possible - you're using Excel 2010 so you can make use of a Table. I'll give you a step by step example and then see if you can adapt it to your needs.
Open a new workbook and put the following values in Sheet1.
A1 MyList
A2 a
A3 b
A4 c
"a","b" and "c" will be the values we want in the dropdown list. Select A1:A4, go to the Insert tab on the Ribbon and choose Table. Make sure that the "My table includes headers" option is ticked and click on OK.
A table tools design tab will appear on the ribbon. If you go on there you'll see that your table has probably been given the name "Table1".
Now go to the Formulas tab on the ribbon and click on Define Name. Give it the name "MyDVList" (without the quotes) and click on grid icon to the right of the "refers to" box and select A2:A4 on Sheet1. Excel should come up with a formula such as this:
=Table1[Column1]
Click on the grid icon again and click on OK.
Next, navigate to Sheet2 and select cell A1. On the Ribbon choose Data > Validation. In the Allow box pick "List" and in the Source box type in this:
=MyDVList
Click on OK.
Now we can look at the results. If you click on the drop down arrow on Sheet2!A1 you will see three choices - "a", "b", "c". Then go to Sheet1 and add a new value at the bottom of the table. Let's say "d" in cell A5. Go back to Sheet2!A1 and check the dropdown list. You should see that it has automatically expanded to include "d" too.