3-Methyl-4H-isoxazol-5-one was synthesized at room temperature by simple stirring method from ethyl acetoacetate and hydroxylamine hydrochloride in aqueous medium and coupled with diazotized substituted amine to form series of 4-(substituted phenylazo)-3-methyl-4H-isoxazol-5-ones through green chemistry. All the compounds formed were characterized by IR, 1 H and 13 C NMR spectroscopy, MS and elemental analysis. Crystal structure of novel 4-(4-fluorophenylazo)-3-methyl-4H-isoxazol-5-one was determined by the X-ray diffraction. Antibacterial and antifungal activity was studied against Escherichia coli, Pseudomonas aeruginosa, Staphylococcus aureus, Staphylococcus pyogenus and Candida albicans, Aspergillus niger, Aspergillus clavatus, respectively. All synthesized compounds were found to be active against a gram-positive bacterium Staphylococcus aureus. Two compounds showed antifungal activity against Candida albicans close to standard greseofulvin.