Diethyl phthalimidomalonate is primarily used as an intermediate in organic synthesis, particularly in the production of pharmaceuticals and fine chemicals. It plays a key role in the synthesis of amino acids and peptides, where it serves as a building block for introducing specific functional groups. Its structure allows for efficient modification, making it valuable in the development of compounds with potential therapeutic applications. Additionally, it is utilized in research laboratories for studying reaction mechanisms and developing novel synthetic pathways. Its versatility and reactivity make it a useful reagent in the field of medicinal chemistry and drug discovery.