Potassium 2-cyanoacetate is primarily used as a key intermediate in organic synthesis, particularly in the production of pharmaceuticals and fine chemicals. It serves as a building block for the synthesis of various heterocyclic compounds, which are essential in drug development. The compound is also utilized in the preparation of dyes and pigments, contributing to the coloration of materials in the textile and printing industries. Additionally, it plays a role in the synthesis of agrochemicals, aiding in the development of pesticides and herbicides. Its reactivity and versatility make it valuable in research and industrial applications for creating complex chemical structures.