Awareness for the importance of psychological and spiritual needs in patients with terminal diseases has increased in recent years, but randomized trials on the effects of psychosocial interventions are still rare. To investigate the efficacy of the "Song of Life" music therapy intervention regarding the emotional and psycho-spiritual dimensions of quality of life. Patients were randomly assigned to either "Song of Life" or a relaxation intervention. "Song of Life" is a novel three-session music therapy intervention working with a biographically meaningful song. Primary outcome was the improvement in psychological quality of life. Secondary outcomes included spiritual well-being, ego-integrity, momentary distress, and global quality of life and the explorative assessment of treatment satisfaction (patient and family member version). Intention-to-treat analysis was conducted including adjustment for multiple testing in secondary outcomes. Between December 2018 and August 2020, 104 patients receiving specialized palliative care were recruited from two palliative care wards. No significant differences were found regarding psychological and global quality of life, but "Song of Life" participants reported significantly higher spiritual well-being (p = 0.04) and ego-integrity (p < 0.01), as well as lower distress (p = 0.05) than patients in the control group. Both patients' and family members' treatment satisfaction was higher after "Song of Life" with large between-group effect sizes on items asking for meaningfulness (d = 0.96) and importance (d = 1.00). Our findings provide evidence that "Song of Life" is an effective and meaningful biographical music therapy intervention to facilitate psycho-spiritual integration in terminally ill patients. German Clinical Trials Register (DRKS)-DRKS00015308 (date of registration: September 7th 2018).