In current study, synthesis of a novel azetidin-2-one compound, i.e 1,1’-[1,4-phenylenebis(1,3,4-thiadiazol-5,2-diyl)] bis (3-chloro-4-(4-hydroxyphenyl) azetidin-2-one from reaction of 0.002mole of 4,4’-[1,4-phenylene bis(1,3,4-thiadiazole-5,2-diyl)] bis (azaneylylidene) bis (methaneylylidene) diphenol with 0.004mole of 2-chloroacetylchloride in dioxane as a solvent in the presence of trimethylamine. The biological activity of new azetidin-2-one compound was evaluated at 100 mg/ml against four types of bacteria i.e. Bacillus cereus, Staphylococcus aureus, Escherichia coli and Salmonella sp. and its minimum inhibitory concentration (MIC) was 2, 2, 3, 3 mg/ml for Bacillus cereus, Staphylococcus aureus, Escherichia coli and Salmonella sp. respectively. Median lethal dose (LD50) and cytotoxicity activity were also investigated. The LD50 for this compound is 1.4 gm/kg bw. The results showed that this compound did not affect the red blood cell until the concentration reach 25 mg/ml or above. The new compound was characterized by spectral data, i.e., FT-IR, 1H-NMR, 13C-NMR and elemental analysis which confirmed its proposed structure.