The biologically effective Schiff bases N-arylidene-4-(furan-2-yl)-6-methyl-2-oxo-1,2,3,4-tetrahydropyrimidine-5- carbohydrazide (2a-h) was prepared by condensation reaction of 4-(furan-2-yl)-6-methyl-2-oxo-1,2,3,4- tetrahydropyrimidine-5-carbohydrazide (1) aromatic aldehydes. Further reaction of schiff bases with triethyl amine (TEA) and 1,4-dioxane yields 4-(furan-2-yl)-6-methyl-2-oxo-N-(3-chloro-4-oxo-2-arylazetidin-1-yl)-1,2,3,4- tetrahydropyrimidine-5-carboxamide (3a-h). Characterization of Schiff bases and novel 2-azetidinone derivatives was carried out by CHN, FT-IR, NMR and LC-MS spectral analysis Also the antimicrobial activity of final compounds was examined against various microorganisms.