A randomized, double-blind, placebo-controlled trial was conducted to (1) evaluate efficacy and safety of transdermal testosterone gel (AndroGel) for hypogonadal men in Taiwan, and (2) observe improvements in sexual function through international index of erectile function (IIEF) scores. Eligible hypogonadal men were randomized to receive 50 mg/day transdermal testosterone gel (TTG) or placebo for 3 months. Primary end point was change from baseline in total testosterone (TT) and free testosterone (FT). Secondary end points were change from baseline in serum hormone levels (such as dihydrotestosterone (DHT), estradiol (E2), luteinizing hormone (LH), folliclestimulating hormone (FSH) and sex-hormone-binding globulin (SHBG)) and changes in IIEF scores. Safety evaluations included adverse events (AEs) and skin irritation assessment. Compared with baseline, the TTG group (n ¼ 20) had statistically significant increases in mean TT levels at month 1 (P ¼ 0.024) and month 2 (P ¼ 0.025), but no significant changes at month 3. TT levels in the placebo group (n ¼ 18) showed no statistically significant change at any visit. Changes in FT levels paralleled changes in TT levels in both groups. TTG group IIEF scores were significantly increased at month 3 (P ¼ 0.01), compared with a decline in placebo scores. No drug-related AEs occurred in the TTG group; the placebo group had 2 AEs (mild skin rash). In conclusion, TTG effectively restores serum TT and FT levels to a normal physiological range for hypogonadal men in Taiwan and improves sexual function.