Researchers say the animals were less than four years old, and probably formed a "creche" composed of babies from at least two different clutches.
The Psittacosaurus discovery indicates the animals had started forming social groups much earlier than previously thought, the scientists add.
The 120-million-year-old fossils are reported in the journal Palaeontology.
Research on the herd was led by Dr Paul Barrett, from London's Natural History Museum.
He says the specimens are spectacularly well preserved and together offer a unique insight into the behaviour of the Psittacosaurus, which sported a parrot-like beak.
"What [this find] shows is that these animals actually lived in small groups and not only did they live in groups but those groups were made up of individuals from different sets of clutches," Dr Barrett explained.
"So, one animal came along and laid a set of eggs somewhere, another one laid another set somewhere else - and individuals from each of those clutches came together to form a herd and that's the first time that we have good evidence of herding behaviour in these early dinosaurs," he told BBC News.
It is this evidence of herding in Psittacosaurus that convinces Dr Barrett that the dinosaur was an inherently social creature; and that the horns that came later in its more flamboyant descendent, the iconic Triceratops, probably evolved for mating rituals rather than as a defence to butt away predators such as T. Rex.
"It's a very similar argument to that which has been proposed for looking at the evolution of things like horns and antlers in living mammals," he said.
"Although they are sometimes used for warding off predators, the main reason they're there is actually for display and for helping recognise each other."
The Psittacosaurus herd was excavated from the Yixian Formation in northeast China. These are the same beds that have yielded the famous "feathered dinosaurs".
Paul Barrett worked with Zhao Qi of the Chinese Academy of Sciences and David A Eberth of the Royal Tyrrell Museum of Palaeontology, Canada.
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