Erectile dysfunction caused by damage to the cavernous nerve (CN) is a common complication of radical prostatectomy for patients with localized prostate cancer. Various studies have investigated repair of damaged tissue and prevention of fibrosis in the corpus cavernosum using stem cell therapy. However, stem cell therapy has limitations, including insufficient nutrient and oxygen supply to transplanted stem cells. This study investigated whether stem cell/oxygen-releasing hollow microparticles (HP) were therapeutic effect on therapeutic effects on erectile dysfunction in a rat model of bilateral cavernous nerve injury (BCNI). Therapeutic effects were observed in the BCNI model at 1,2, and 4 weeks post-cavernous nerve injury. Erectile function further improved after treatment with stem cell/oxygen-releasing HP system compared treatment with only stem cells at 4 weeks. Stem cell/oxygen-releasing HP system increased cGMP level and nNOS, eNOS, a-SMA and M3 expression, while decreasing fibrosis and apoptosis in the corpus cavernosum. Our results clearly show that stem cell survival increase around transplanted stem cell/oxygen releasing hybrid system site. Taken together, an oxygen-releasing HP system supported prolonged stem cell survival, sustaining the paracrine effect of the stem cells, and consequently enhancing erectile function. These findings show promise with regard to prolonged stem cell survival in stem cell applications for various diseases and types of tissue damage.