Alcoholic hydrogels containing prostaglandin E1 ethyl ester (PGE1-EE), a prodrug of PGE1 as a therapeutic agent for erectile dysfunction, were formulated. The prodrug was stable against chemical hydrolysis in aqueous solution (pH 7.4), devoid of esterase activities, but was hydrolyzed to the parent drug in rat skin homogenates within 240 min. In the rat skin penetration study for 24 h, the steady-state flux values (microg/cm2/h) of PGE1-EE and PGE, from alcoholic hydrogels having 20% ethanol content were 7.6 and 1.8, respectively. PGE1-EE was superior to PGE, from a skin penetration point of view due to its increased lipophilicity. The fastest skin penetration rate was obtained for PGE1-EE in 20% alcoholic hydrogel together with limonene or cineole. These formulations increased the flux of PGE1-EE up to about 4-fold compared to control hydrogel in the absence of penetration enhancers. In the pharmacodynamic study using a cat, alcoholic hydrogel with limonene or cineole showed a significant effect in terms of increasing intracavernosal pressure compared to control hydrogel. Therefore, the transdermal alcoholic hydrogel formulation of PGE1-EE with limonene or cineole can be a promising transdermal delivery system to overcome inconvenience associated with frequent intracavernosal injections for the treatment of erectile dysfunction.