We understand that this is "self-soothing" and don't want to make it seem like it is "bad" or "wrong" to touch his penis. However, it has been causing real problems because the more he jams his hands into his diapers, the more frequently we have to deal with diaper leaks because he compromises the diapers so much. That has been a continued problem.
Masturbation in the young child
Many young children touch their privates, and often it is simple curiosity: they are interested in "that thing" down there. They pull on it, push on it, wiggle it, and sometimes while exploring their diaper they find some poop! Wow, that came out of ME?! This is kind of fun! This type of touching is usually just a very curious toddler exploring his body, much like his finger explores his nose to see what treasures he can find.
Masturbation in a child is different; the child will usually appear dazed, flushed, and preoccupied while rubbing themselves with their hand or another object. Children might masturbate several times per day or only once a week.
Why do they do this? Mostly because it feels good. Some might do it because they are unhappy about something like getting their pacifier taken away. Children might also do this simply because they are constantly being told not to. Masturbation is NOT caused by simple irritation in the area - this just causes pain and/or itching.
Don't make a big deal about this: First of all, don't worry. About one third of young kids do this, and practically all teenagers do it. It is not abnormal unless they continue to do it in public beyond age 5-6.
It does NOT cause any physical harm, and does NOT mean you child will grow up to be sexually promiscuous. However, if adults overreact and make the child think it's evil or dirty then it can lead to emotional harm, such as guilt or sexual inhibitions.
What to do about it:
Dr. Jim