The beating heart is the manifestation of the narrator's guilt. He leads the police around with such an easy, open manner that they do not suspect him of the murder. He even has them sit in the room where the body lies buried under the floorboards and puts his own chair exactly on top of where the corpse is hidden. However, the police still suspect nothing.
In bringing the police to this room, asking them to sit, and putting himself over the corpse as if marking it with an X, it is as if the narrator is begging the police to discover his guilty secret.
When they do not, then he begins to hear the sound of the beating heart. It is all in his head, but the noise grows louder and louder as his sense of guilt grows more and more intense. It's as if he can't bear to get way with his crime. Finally, he decides that the police must hear the heart and must know what he has done. He decides they are toying with him, torturing him. How can they not hear a sound so loud? The idea that they are mocking him compels him to do what he wants to do, which is to confess:
“Villains!” I shrieked, “dissemble [pretend] no more! I admit the deed!—tear up the planks!—here, here!—it is the beating of his hideous heart!”
The narrator also hears immediately before he kills the old man. The heartbeat is significant of the narrator's guilt.
The narrator assures the reader at the beginning of the short story that he's not crazy, but more often than not, when Poe has a narrator insist that he's not crazy, the narrator usually is.
The heartbeat is other-worldly; the narrator is the only once who can hear it, and it makes him increasingly uncomfortable and drives him so insane so his only relief is to admit to the murder. It is either his own subconscious driving him to admit the murder or an other-worldly effect to drive him to the same conclusion--perhaps the old man's revenge from beyond the grave.