Palifermin, a recombinant human keratinocyte growth factor, was tested for potential benefits on acute graft-versus-host disease (GVHD) and hematopoietic recovery in allogeneic hematopoietic stem cell transplantation (HSCT) recipients. This randomized, double-blind, placebo-controlled, dose-escalation study assessed the safety and tolerability of palifermin (n = 69) as compared with placebo (n = 31) in patients conditioned with cyclophosphamide and fractionated total-body irradiation (Cy/TBI) or busulfan and cyclophosphamide (Bu/Cy) and given methotrexate along with a calcineurin inhibitor (cyclosporine A, tacrolimus) for GVHD prophylaxis. All patients received 3 doses before conditioning and either 3 (cohort 1), 6 (cohort 2), or 9 (cohort 3) doses after HSCT. Palifermin doses were 40 μg/kg per day (cohort 1 only) or 60 μg/kg per day (all cohorts). Six patients (placebo = 2, palifermin = 4) experienced a total of 11 dose-limiting toxicities (most often skin, respiratory, or oral mucositis). The most common adverse events included edema, infection, skin pain, or rash. Times to neutrophil and platelet engraftment were similar. No significant differences in acute GVHD incidence or severity, survival, or day 100 relapse rates were observed between groups. Palifermin was associated with reduced incidence and mean severity of mucositis in patients conditioned with Cy/TBI but not Bu/Cy. We conclude that palifermin was generally safe in allogeneic HSCTs but had no significant effect on engraftment, acute GVHD, or survival in this trial.