Phthalimidoacetone is primarily utilized in organic synthesis as an intermediate for the production of various pharmaceuticals and fine chemicals. It plays a key role in the synthesis of peptides and peptidomimetics, where it acts as a protecting group for amino acids during complex reactions. Additionally, it is employed in the development of bioactive compounds, including those with potential antimicrobial or anticancer properties. Its reactivity and stability make it a valuable building block in medicinal chemistry for constructing heterocyclic structures and other specialized molecules.