Erectile dysfunction (ED) worsens in men with diabetes. Human umbilical cord blood (HUCB), because of its widespread availability and low immunogenicity, is a valuable source for stem cell-based therapies. To determine the effect of intracavernous injection of HUCB mononuclear cells (MNCs) on ED in rats with diabetes induced by streptozotocin. Thirty adult male Sprague-Dawley rats were equally divided into three groups: (i) control, (ii) diabetes induced by streptozotocin (35 mg/kg intravenously for 8 weeks), and (iii) diabetic rats treated with MNCs (1 × 106 cells by intracavernosal injection). The HUCB-MNCs isolated by the Ficoll-Hypaque technique were obtained from eight healthy donors and administered to diabetic rats after 4 weeks. The ratio of intracavernosal pressure to mean arterial pressure ratio; the protein expression of endothelial and neuronal markers, such as von Willebrand factor, neuronal nitric oxide synthase, hypoxia-inducible factor-1α, and vascular endothelium growth factor; and the relative area of smooth muscle to collagen using western blotting and Masson trichrome staining were determined. Diabetic rats demonstrated a significantly decreased ratio of intracavernosal pressure to mean arterial pressure (0.26 ± 0.04; P < .01) and treatment with MNCs restored erectile function in diabetic rats (0.67 ± 0.05) compared with control rats (0.56 ± 0.02). In bath studies, neurogenic relaxant and contractile responses were significantly decreased in diabetic cavernosal tissues, which were restored by treatment. The ratio of smooth muscle to collagen was partly recovered by treatment, whereas von Willebrand factor levels were not altered in any group. Neuronal nitric oxide synthase and vascular endothelium growth factor levels were decreased, which were not restored by treatment. Increased hypoxia-inducible factor-1α protein expression in the diabetic group was completely normalized in MNC-treated diabetic samples. These results suggest that HUCB-MNC treatment can enhance the recovery of erectile function and promote numerous activities such the contribution of the hypoxia-inducible factor-1α and von Willebrand factor pathway to the neurogenic erectile response of diabetic rats. HUCB-MNCs in the healing process could involve an adaptive regenerative response and appear to be a potential candidate for cell-based therapy in ED of men with diabetes. It is evident that HUCB could provide a realistic therapeutic modality for the treatment of diabetic ED.