Compensatory vascular mechanisms can restore cerebral blood flow (CBF) but fail to protect against chronic cerebral hypoperfusion (CCH)-mediated neuronal damage and cognitive impairment. Prostaglandin E1 (PGE1) is known as a vasodilator to protect against ischemic injury in animal models, but its protective role in CCH remains unclear. To determine the effect of PGE1 on cerebral hemodynamics and cognitive functions in CCH, bilateral common carotid artery occlusion (BCCAO) was used to mimic CCH in rats, which were subsequently intravenously injected with PGE1 daily for 2 weeks. Magnetic resonance imaging, immunofluorescence staining and Morris water maze (MWM) were used to evaluate CBF, angiogenesis, and cognitive functions, respectively. We found that PGE1 treatment significantly restored CBF by enhancing vertebral artery dilation. In addition, PGE1 treatment increased the number of microvascular endothelial cells and neuronal cells in the hippocampus, and decreased the numbers of astrocyte and apoptotic cells. In the MWM test, we further showed that the escape latency of CCH rats was significantly reduced after PGE1 treatment. Our results suggest that PGE1 ameliorates cognitive dysfunction in CCH rats by enhancing CBF recovery, sustaining angiogenesis, and reducing astrocyte activation and neuronal loss.