Diabetic erectile dysfunction is associated with penile dorsal nerve bundle neuropathy in the corpus cavernosum and the mechanism is not well understood. We investigated the neuropathy changes in the corpus cavernosum of rats with streptozotocin-induced diabetes and the effects of Icariside II (ICA II) on improving neuropathy. Thirty-six 8-week-old Sprague-Dawley rats were randomly distributed into normal control group, diabetic group and ICA-II treated group. Diabetes was induced by a one-time intraperitoneal injection of streptozotocin (60 mg/kg). Three days later, the diabetic rats were randomly divided into 2 groups including a saline treated placebo group and an ICA II-treated group (5 mg/kg/day, by intragastric administration daily). Twelve weeks later, erectile function was measured by cavernous nerve electrostimulation with real time intracorporal pressure assessment. The penis was harvested for the histological examination (immunofluorescence and immunohistochemical staining) and transmission electron microscopy detecting. Diabetic animals exhibited a decreased density of dorsal nerve bundle in penis. The neurofilament of the dorsal nerve bundle was fragmented in the diabetic rats. There was a decreased expression of nNOS and NGF in the diabetic group. The ICA II group had higher density of dorsal nerve bundle, higher expression of NGF and nNOS in the penis. The pathological change of major pelvic nerve ganglion (including the microstructure by transmission electron microscope and the neurite outgrowth length of major pelvic nerve ganglion tissue cultured in vitro) was greatly attenuated in the ICA II-treated group (p < 0.01). ICA II treatment attenuates the diabetes-related impairment of corpus cavernosum and major pelvic ganglion neuropathy in rats with Streptozotocin-Induced Diabetes.