This study treated the isolation and passage of muscle-derived stem cells (MDSCs) from rat penile corpora cavernosa, detection of stem cell marker expression, observation of their self-renewal and continuous proliferation, and demonstration of their potential to differentiate into smooth muscle cells in co-culture. Muscle-derived stem cells from the rat penile corpora cavernosa were isolated and purified. The expression of stem cell markers Sca-1 and desmin was detected in PP6 cells, thus confirming that the main components of PP6 cells are MDSCs. The expression of Sca-1 and desmin occurred both in PP6 cells and cells at passages 3, 6, and 8, and there was no significant decrease in the expression level with increasing passage number. The growth curves indicated that the cell doubling time was approximately 48 h. The cells entered the stationary phase after approximately 7 days of culture. The proliferative activity of the cells at passage 8 remained unchanged. After 2 days of co-culture with smooth muscle cells, the DAPI-labeled MDSCs tended to exhibit smooth muscle cell morphology and expression of alpha-SMA was detected. MDSCs exist in the rat penile corpora cavernosa and possess the potential to differentiate into smooth muscle cells. This discovery serves as the basis in view of the potential use of endogenous stem cells for the treatment of erectile dysfunction (ED).