Neurogenic erectile dysfunction (NED) is a common and serious complication after pelvic surgery. The clinical translation of adipose-derived mesenchymal stem cell (ADSC) therapies in NED remains a major challenge due to their low survival rate and limited therapeutic effect. Peroxiredoxin 2 (PRDX2) is a member of the peroxidase family that exerts its therapeutic effects by inhibiting oxidative stress (OS) and ferroptosis, and PRDX2 is expected to enhance the therapeutic effect of ADSCs in treating NED. The purpose of this study was to investigate whether PRDX2 could improve the survival of ADSCs and determine whether overexpression of PRDX2 in ADSCs (PRDX2-ADSCs) could enhance the therapeutic effect of NED. This study investigated the potential role of PRDX2-ADSCs through a NED model induced by bilateral cavernous nerve injury (BCNI) and three in vitro models established by H2O2-stimulated ADSCs, H2O2-stimulated corpus cavernosum smooth muscle cells (CCSMCs), and RSL3-stimulated CCSMCs. We found that PRDX2 could significantly improve the viability of ADSCs by suppressing apoptosis and OS in H2O2-stimulated ADSCs. We also found that BCNI triggered ferroptosis of the corpus cavernosum, which was manifested by increased reactive oxygen species (ROS), total iron content, and MDA as well as decreased SOD and GSH. Our results further demonstrated changes in the expression of key proteins (GPX4 and ACSL4) in the ferroptosis pathway, whereas PRDX2-ADSCs ameliorated BCNI-induced erectile dysfunction and ferroptosis of the corpus cavernosum in NED rats. Consistently, PRDX2-ADSCs attenuated OS in H2O2-stimulated CCSMCs and inhibited ferroptosis in RSL3-stimulated CCSMCs, as evidenced by the decrease in ROS, total iron content, and MDA and the increase in SOD and GSH together with changes in ferroptosis-related protein (GPX4 and ACSL4) expression. In conclusion, overexpression of PRDX2 in ADSCs enhanced the therapeutic effect in a rat model of neurogenic erectile dysfunction by inhibiting ferroptosis via regulation of the GPX4/ACSL4 axis.