Erectile dysfunction (ED) affects a significant proportion of men aged 40–70 and is caused by cavernous tissue dysfunction. Presently, the most common treatment for ED is phosphodiesterase 5 inhibitors; however, this is less effective in patients with severe vascular disease such as diabetic ED. Therefore, there is a need for development of new treatment, which requires a better understanding of the cavernous microenvironment and cell-cell communications under diabetic condition. Pericytes are vital in penile erection; however, their dysfunction due to diabetes remains unclear. In this study, we performed single-cell RNA sequencing to understand the cellular landscape of cavernous tissues and cell type-specific transcriptional changes in diabetic ED. We found a decreased expression of genes associated with collagen or extracellular matrix organization and angiogenesis in diabetic fibroblasts, chondrocytes, myofibroblasts, valve-related lymphatic endothelial cells, and pericytes. Moreover, the newly identified pericyte-specific marker, Limb Bud-Heart (Lbh), in mouse and human cavernous tissues, clearly distinguishing pericytes from smooth muscle cells. Cell–cell interaction analysis revealed that pericytes are involved in angiogenesis, adhesion, and migration by communicating with other cell types in the corpus cavernosum; however, these interactions were highly reduced under diabetic conditions. Lbh expression is low in diabetic pericytes, and overexpression of LBH prevents erectile function by regulating neurovascular regeneration. Furthermore, the LBH-interacting proteins (Crystallin Alpha B and Vimentin) were identified in mouse cavernous pericytes through LC-MS/MS analysis, indicating that their interactions were critical for maintaining pericyte function. Thus, our study reveals novel targets and insights into the pathogenesis of ED in patients with diabetes.