Mesenchymal stem cells (MSCs) can be used in adult stem cell-based gene therapy for vascular diseases. To test the hypothesis that MSC alone or eNOS modified MSCs can be used for treatment of erectile dysfunction (ED), syngeneic rat MSCs (rMSCs) were isolated, ex vivo expanded, transduced with adenovirus containing endothelial nitric oxide synthase (eNOS), and injected into the penis of aged rats. Histological analysis demonstrated that rMSCs survived for at least 21 days in corporal tissue after intracavernous injection and an inflammatory response was not induced. Intracavernous administration of eNOS-modified rMSCs improved the erectile response in aged rats at 7 and 21 days after injection. The increase in erectile function was associated with increased eNOS protein, NOS activity and cGMP levels. rMSCs alone increased erectile function of aged rats at day 21, but not at day 7, with the transplanted cells exhibiting positive immunostaining for several endothelial and smooth muscle cell markers. This change in rMSC phenotype was accompanied by upregulation of penile eNOS protein expression/activity and elevated cGMP levels. These findings demonstrate that an adenovirus can be used to transduce ex vivo expanded rMSCs to express eNOS and that eNOS modified rMSCs improve erectile function in the aged rat. Intracavernous injection of unmodified wild type rMSCs improved erectile function 21 days after injection through mechanisms involving improved endothelial-derived NO/cGMP signaling and rMSCs differentiation into penile cells expressing endothelial and smooth muscle markers. These data highlight the potential clinical use of adult stem cell-based therapy for the treatment of ED.