Background Different additives have been reported to prolong the duration of caudal anesthesia in pediatrics. Although these drugs successfully increased the duration of the block, ketamine has been found to effectively increase the duration of caudal block in pediatrics. Aim This study aimed to assess the clinical effectiveness of ketamine after caudal or intravenous administration in pediatric patients who underwent hypospadias repair to distinguish between local and systemic analgesia. Patients and methods After induction of general anesthesia, 48 patients, aged 1–6 years, assigned to undergo hypospadias repair, received a caudal injection of bupivacaine and were randomly blinded into two groups: K1 group received 1 mg/kg S-ketamine as the caudal group, and K2 group received 1 mg/kg S-ketamine as the intravenous group. Postsurgical measurements included the effectiveness of postsurgical analgesia, which was assessed by using observational pain scale, duration of analgesia, sedation score, and hemodynamic and complications. Results The caudal block was successful in all the patients included in the study. None of the patients in either groups required intraoperative rescue analgesia. All patients remained vitally stable during the procedure, and intraoperative hemodynamic parameters were comparable in the two groups. The time to the administration of first analgesia was statistically longer in K1 group (11.5±4.6 h) than in the K2 group (8.7±3.1 h). Time to spontaneous leg movement and time to first micturition were statistically nonsignificant between both groups. The number of patients requested for additional analgesic drugs (acetaminophen and ibuprofen) was statistically significant, being higher in the K2 group than the K1 group. Conclusion This study demonstrates that ketamine if added to caudal epidural in a dose of 1 mg/kg provided prolonged postoperative analgesia with improved quality, had longer duration of analgesia, decreased the supplemental acetaminophen analgesia during the first 24 h postoperatively, had stable hemodynamic changes, and had comparable adverse effects and complications in comparison with systemic ketamine in a dose of 1 mg/kg.