Objective  To compare the intraurethral application of liposomal prostaglandin‐E1 (PGE1) with intracavernosal injection of PGE1 in patients with organic or psychogenic erectile dysfunction (ED). Patients and methods  Penile tumescence and rigidity were classified by palpation in 25 patients (10 with psychogenic and 15 with organic ED; median age 45 years, range 23–67). All patients were undergoing primary treatment for ED, the median (range) duration of which was 23 (2–44) months. After administering PGE1 by each route (1 mg intraurethral and 0.02 or 0.01 mg intracavernosal), the degree of erection was assessed and duplex ultrasonography of the deep penile artery was performed. Results  After the intraurethral application of liposomal PGE1, there was mild penile tumescence in 12 patients with organic ED, the others having no response. In contrast, intracavernosal injection produced sufficient rigidity in 13 patients with organic ED, while two only had a slight increase in tumescence. In patients with psychogenic ED, intraurethral application gave adequate rigidity in six, with four having little or no tumescence, and intracavernosal injection induced sufficient rigidity for intercourse in all. Duplex ultrasonography of the deep penile artery of the penis showed that intraurethral application induced lower flow rates than intracavernosal injection. No patient reported pain after intraurethral application but two of 25 reported severe pain after intracavernosal injection. Conclusions  The intraurethral application of liposomal PGE1 did not produce sufficient rigidity and was not effective in patients with organic ED. However, it did produce sufficient rigidity in six of 10 patients with psychogenic ED and may thus provide a therapeutic alternative in selected patients.