Intravenous immune checkpoint inhibition is an effective anticancer strategy for bacillus Calmette-Guérin (BCG)-unresponsive non-muscle-invasive bladder cancer (NMIBC) but may be associated with greater systemic toxicity compared with localized therapies. We assessed the safety and antitumor activity of intravesical pembrolizumab combined with BCG. A 3 + 3 phase 1 trial of pembrolizumab + BCG was conducted in patients with BCG-unresponsive NMIBC (NCT02808143). Pembrolizumab was given intravesically (1-5 mg/kg for 2 h) beginning 2 weeks prior to BCG induction until recurrence. Urine profiling during treatment and spatial transcriptomic profiling of pre- and post-treatment tumors were conducted to identify biomarkers that correlated with response. Safety and tolerability of immune checkpoint inhibition were assessed, and Kaplan-Meier survival analysis was performed. Nine patients completed therapy. Median follow-up was 35 months for five patients still alive at the end of the trial. The trial was closed due to the COVID-19 pandemic. Grade 1-2 urinary symptoms were common. The maximum tolerated dose was not reached; however, one dose-limiting toxicity was reported (grade 2 diarrhea) in the only patient who reached 52 weeks without recurrence. One death occurred from myasthenia gravis that was deemed potentially related to treatment. The 6-mo and 1-yr recurrence-free rates were 67% (95% confidence interval [CI]: 42-100%) and 22% (95% CI: 6.5-75%), respectively. Pembrolizumab was detected in the urine and not in blood. CD4+ T cells were significantly increased in the urine after treatment, and a transcriptomic analysis identified decreased expression of T-cell exhaustion markers in late recurrences. We demonstrate that intravesical pembrolizumab is safe, feasible, and capable of eliciting strong immune responses in a clinical setting and should be investigated further. Direct application of pembrolizumab to the bladder is a promising alternative for non-muscle-invasive bladder cancer unresponsive to Bacillus Calmette-Guérin and should be investigated further.