Yes you can, but like everything to do with sendmail, it is a difficult thing to set up. I haven't seen any Mac OS X specific instructions, but here are the *nix instructions on sendmail's site:
You might want to look at Postfix also. I monkeyed with Sendmail for a week, before I gave up and installed Postfix. Easy install and it can be admin' through the WebMin interface.
Strangely enough after I got postfix running on my main server box, I also discovered a trick to get sendmail working on the other box. Turns out there is a bug in the sendmail/OS X install that prevents sendmail from running if the root directory of your machine is group writeable. Following instructions I found I simply turned of the group writeable bit for the root ("/") directory and all of the sudden sendmail started working - without any configuration. I really don't need it for anything on this machine - but it is useful to use for sending out the daily cron reports, etc. to my mail account.