Unlike Viagra, which is used to treat male erectile dysfunction by increasing blood flow to the genitals, this drug acts on the woman's brain to enhance mood.
Lead researchers from University of Ottawa -- underwritten by Boehringer Ingelheim Pharmaceuticals -- say the drug is effective in treating a newly coined condition known as hypoactive sexual desire disorder (HSDD) or lack of libido.
"This is a landmark study, and I think it's going to make a great difference for the quality of life for women throughout the world," said Dr. Elaine Jolly, director of the Women's Health Center at Ottawa Hospital in Canada. "This is just the beginning."
The drug acts on the central nervous system, keeping serotonin, norepinephrine and dopamine "in balance," she told ABCNews.com.
The Phase III placebo-controlled studies on flibanserin also raise questions about whether HSDD is a legitimate medical condition or another pharmaceutical company invention to sell drugs.
HSDD was classified as a disorder by the American Psychiatric Association in 2002 and is characterized by low desire, accompanied by "anxiety, guilt and relationships issues," according to Jolly.
"The pharmaceutical industry has come up with Viagra to solve a major concern that men have had since the beginning of time," said June Reinisch, senior research fellow at The Kinsey Institute for Research in Sex, Gender and Reproduction.
"But until now, nobody has seemed that concerned about resolving what women might like."
Reinisch said while the study was "interesting," there were more questions about the data -- women surveyed were 18 to 50, a wide range, and from different countries.
There was also a very strong placebo effect among the women.
"We ladies are complicated, and this study is only looking at one thing," she said. "It may be a first step in something interesting, but to call it a female Viagra, we are getting way ahead of ourselves."
"Women are not interested in getting a hard on, they want to have desire and arousal," said Reinisch, who is also a consultant to New York's Museum of Sex.
The randomized, double-blind study on flibanserin was carried out in Canada's Women's Health Center of the Ottawa Hospital, as well as at University of Virginia, University of North Carolina Chapel Hill and Italy's University of Pavia.
Premenopausal women treated for 24 weeks showed significant improvements in sexual desire and functioning compared with those on a placebo.
The 1,378 study participants were required to be in a "stable, communicative, monogamous, heterosexual" relationship for at least one year.
All exhibited generalized acquired sexual dysfunction disorder or "little or no receptivity" to sexual activity. Those who had secondary problems with arousal or orgasm were excluded from the study, as well as those with psychiatric and depressive disorders or those who had taken medication that might diminish or enhance sexual function within four weeks prior to entering the study.