The purpose of this study was to optimize the configuration of a photoacoustic endoscope (PAE) for prostate cancer detection and therapy monitoring. The placement of optical fiber bundles and ultrasound detectors was chosen to maximize the photoacoustic imaging penetration depth. We performed both theoretical calculations and simulations of this optimized PAE configuration on a prostate-sized phantom containing tumor and various photosensitizer concentrations. The optimized configuration of PAE with transurethral light delivery simultaneously increases the imaging penetration depth and improves image quality. Thermal safety, investigated via COMSOL Multiphysics, shows that there is only a 4 mK temperature rise in the urethra during photoacoustic imaging, which will cause no thermal damage. One application of this PAE has been demonstrated for quasi-quantifying photosensitizer concentrations during photodynamic therapy. The sensitivity of the photoacoustic detection for TOOKAD was 0.18 ng/mg at a 763 nm laser wavelength. Results of this study will greatly enhance the potential of prostate PAE for in vivo monitoring of drug delivery and guidance of the laser-induced therapy for future clinical use.