Self-renewal and differentiation of endogenous stem cells (SCs) are essential for adult tissue homoeostasis and intrinsic healing capacity. Here, we hypothesize that penis contains a small population of endogenous SCs which might help rejuvenation of damaged erectile function. In this study, 60 newborn male rats were intraperitoneally injected with 5-ethynyl-2-deoxyuridine (EdU; 50 mg) for the purpose of tracking endogenous SCs. Twelve weeks later, 48 rats underwent bilateral cavernous nerves (CN) injury and were randomized into gavage feeding of solvent (vehicle group) or icariside II (ICAII) (0.5, 1.5 and 4.5 mg per day, respectively). Twelve sham-operated rats received vehicle treatment and served as control. The treatments were continued for 4 weeks followed by a washout period of 72 h. Results showed that ICAII treatment significantly restored erectile function and effectively prevented distortion of normal neural anatomy, smooth muscle atrophy and collagen deposition compared to vehicle group. The numbers of label retaining cells (LRCs) co-expressing EdU and differentiated phenotypes (smooth muscle markerα-SMA or Schwann cell marker S100) were significantly higher in three ICAII-treated groups than those in vehicle group in a dose-dependent manner. In addition, the changing trend of p38 mitogen activated protein kinase (MAPK) activity in the penis between groups was same as that of the number of differentiated LRCs. Together, these results suggest that the underlying mechanisms of ICAII in ameliorating erectile function and pathological changes appear to involve enhanced endogenous SCs differentiation, which might be regulated by p38 MAPK signaling pathway.