-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
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 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 P6Uh5INjz2rfxBUImbnvRHR9kpFtv6fu3UCAciDwEg/7UYju6azODKyEwW74Ds/L
 8f+l92SAq60j/w6AGE8uIg==

<SEC-DOCUMENT>0001181431-03-014986.txt : 20030723
<SEC-HEADER>0001181431-03-014986.hdr.sgml : 20030723
<ACCEPTANCE-DATETIME>20030722195722
ACCESSION NUMBER:		0001181431-03-014986
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:			MALONEY PETER J
		CENTRAL INDEX KEY:			0001187983

	FILING VALUES:
		FORM TYPE:		4
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-27241
		FILM NUMBER:		03797267

	BUSINESS ADDRESS:	
		STREET 1:		C/O KEYNOTE SYSTEMS
		STREET 2:		777 MARINERS ISLAND BLVD
		CITY:			SAN MATEO
		STATE:			CA
		ZIP:			94404
		BUSINESS PHONE:		6504033298

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>rrd13755.xml
<DESCRIPTION>7-18-03 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>0001187983</rptOwnerCik>
            <rptOwnerName>MALONEY PETER J</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>Vice President of Finance</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>50000</value></transactionShares>
<transactionValue>
<value>10.73</value></transactionValue>
<transactionAcquiredDisposedCode>
<value>A</value></transactionAcquiredDisposedCode></transactionAmounts>
<exerciseDate>
<value>2004-07-18</value>
<footnoteId id="F1"/></exerciseDate>
<expirationDate>
<value>2013-07-18</value></expirationDate>
<underlyingSecurity>
<underlyingSecurityTitle>
<value>Common Stock</value></underlyingSecurityTitle>
<underlyingSecurityShares>
<value>50000</value></underlyingSecurityShares></underlyingSecurity>
<postTransactionAmounts>
<sharesOwnedFollowingTransaction>
<value>50000</value></sharesOwnedFollowingTransaction></postTransactionAmounts>
<ownershipNature>
<directOrIndirectOwnership>
<value>D</value></directOrIndirectOwnership>
<natureOfOwnership>
<value></value></natureOfOwnership></ownershipNature></derivativeSecurity>
<footnotes>
<footnote id="F1">Option is exercisable as to (i) 25% of the total shares as of this first anniversary date and (ii) 2.083% of the total number of shares each month thereafter.</footnote></footnotes>
<ownerSignature>
<signatureName>Peter Maloney</signatureName>
<signatureDate>2003-07-22</signatureDate></ownerSignature></ownershipDocument>


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