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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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MIC-Info: RSA-MD5,RSA,
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 eNfOZx5T8FNQ6RbEqOXHRw==

<SEC-DOCUMENT>0001181431-03-014979.txt : 20030723
<SEC-HEADER>0001181431-03-014979.hdr.sgml : 20030723
<ACCEPTANCE-DATETIME>20030722195427
ACCESSION NUMBER:		0001181431-03-014979
CONFORMED SUBMISSION TYPE:	4
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20030718
FILED AS OF DATE:		20030723

REPORTING-OWNER:	

	OWNER DATA:	
		COMPANY CONFORMED NAME:			GYANI MOHAN S
		CENTRAL INDEX KEY:			0001182428

	FILING VALUES:
		FORM TYPE:		4
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-27241
		FILM NUMBER:		03797260

	MAIL ADDRESS:	
		STREET 1:		7277 164TH AVE NE
		STREET 2:		BLDG1
		CITY:			REDMOND
		STATE:			WA
		ZIP:			98052

ISSUER:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KEYNOTE SYSTEMS INC
		CENTRAL INDEX KEY:			0001032761
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-BUSINESS SERVICES, NEC [7389]
		IRS NUMBER:				943226488
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	BUSINESS ADDRESS:	
		STREET 1:		777 MARINERS ISLAND BLVD.
		CITY:			SAN MATEO
		STATE:			CA
		ZIP:			94404
		BUSINESS PHONE:		650-403-2400

	MAIL ADDRESS:	
		STREET 1:		777 MARINERS ISLAND BLVD.
		CITY:			SAN MATEO
		STATE:			CA
		ZIP:			94404
</SEC-HEADER>
<DOCUMENT>
<TYPE>4
<SEQUENCE>1
<FILENAME>rrd13784.xml
<DESCRIPTION>07-18-03 OPTION GRANT
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>
    <schemaVersion>X0101</schemaVersion>

    <documentType>4</documentType>
<periodOfReport>2003-07-18</periodOfReport>
<notSubjectToSection16>0</notSubjectToSection16>
    <issuer>
        <issuerCik>0001032761</issuerCik>
        <issuerName>KEYNOTE SYSTEMS INC</issuerName>
        <issuerTradingSymbol>KEYN</issuerTradingSymbol></issuer>
<reportingOwner>
<reportingOwnerId>
            <rptOwnerCik>0001182428</rptOwnerCik>
            <rptOwnerName>GYANI MOHAN S</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>  </rptOwnerStreet1>
            <rptOwnerStreet2>  </rptOwnerStreet2>
            <rptOwnerCity>  </rptOwnerCity>
            <rptOwnerState>  </rptOwnerState>
            <rptOwnerZipCode>  </rptOwnerZipCode>
        </reportingOwnerAddress>
            <reportingOwnerRelationship>
<isDirector>0</isDirector>
<isOfficer>1</isOfficer>
<isTenPercentOwner>0</isTenPercentOwner>
<isOther>0</isOther>
<officerTitle>Officer</officerTitle>
<otherText></otherText></reportingOwnerRelationship></reportingOwner>
<derivativeSecurity>
<securityTitle>
<value>Employee Stock Option (Right to Purchase)</value></securityTitle>
<conversionOrExercisePrice>
<value>10.73</value></conversionOrExercisePrice>
<transactionDate>
<value>2003-07-18</value></transactionDate>
<transactionCoding>
<transactionFormType>4</transactionFormType>
<transactionCode>A</transactionCode>
<equitySwapInvolved>0</equitySwapInvolved></transactionCoding>
<transactionAmounts>
<transactionShares>
<value>15000</value></transactionShares>
<transactionValue>
<value>10.73</value></transactionValue>
<transactionAcquiredDisposedCode>
<value>A</value></transactionAcquiredDisposedCode></transactionAmounts>
<exerciseDate>
<value>2004-03-25</value>
<footnoteId id="F1"/></exerciseDate>
<expirationDate>
<value>2013-07-18</value></expirationDate>
<underlyingSecurity>
<underlyingSecurityTitle>
<value>Common Stock</value></underlyingSecurityTitle>
<underlyingSecurityShares>
<value>15000</value></underlyingSecurityShares></underlyingSecurity>
<postTransactionAmounts>
<sharesOwnedFollowingTransaction>
<value>15000</value></sharesOwnedFollowingTransaction></postTransactionAmounts>
<ownershipNature>
<directOrIndirectOwnership>
<value>D</value></directOrIndirectOwnership>
<natureOfOwnership>
<value></value></natureOfOwnership></ownershipNature></derivativeSecurity>
<footnotes>
<footnote id="F1">Option grant is exercisable as to (i) 33.3% of the total number of shares subject to the option on the date of 2004 Annual Meeting of Stockholders, and (ii) 2.82% of the total number of shares subject to the option monthly thereafter.  The Issuer has not yet set the date for its 2004 Annual Meeting of Stockholders, so for purposes of this filing only, the &quot;Date Exercisable&quot; assumes that the date of the 2004 Annual Meeting is one year after the date of the 2003 Annual Meeting.</footnote></footnotes>
<ownerSignature>
<signatureName>Mohan Gyani</signatureName>
<signatureDate>2003-07-22</signatureDate></ownerSignature></ownershipDocument>


</XML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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