Purpose: Diarrhea (with or without colitis) is an immune-related adverse event (irAE) associated with ipilimumab. A randomized, double-blind, placebo-controlled, multicenter, multinational phase II trial was conducted to determine whether prophylactic budesonide (Entocort EC), a nonabsorbed oralsteroid, reduced the rate of grade ≥2 diarrhea in ipilimumab-treated patients with advanced melanoma. Experimental Design: Previously treated and treatment-naïve patients (N = 115) with unresectable stage III or IV melanoma received open-label ipilimumab (10 mg/kg every 3 weeks for four doses) with daily blinded budesonide (group A) or placebo (group B) through week 16. The first scheduled tumor evaluation was at week 12; eligible patients received maintenance treatment starting at week 24. Diarrhea was assessed using Common Terminology Criteria for Adverse Events (CTCAE) 3.0. Patients kept a diary describing their bowelhabits. Results: Budesonide did not affect the rate of grade ≥2 diarrhea, which occurred in 32.7% and 35.0% of patients in groups A and B, respectively. There were no bowel perforations or treatment-related deaths. Best overall response rates were 12.1% in group A and 15.8% in group B, with a median overall survival of 17.7 and 19.3 months, respectively. Within each group, the disease controlrate was higher in patients with grade 3 to 4 irAEs than in patients with grade 0 to 2 irAEs, although many patients with grade 1 to 2 irAEs experienced clinical benefit. Novel patterns of response to ipilimumab were observed. Conclusions: Ipilimumab shows activity in advanced melanoma, with encouraging survival and manageable adverse events. Budesonide should not be used prophylactically for grade ≥2 diarrhea associated with ipilimumab therapy.