Benzotriazole was condensed stoichiometrically with ethyl chloro acetate in presence of potassium carbonate. The resulting ethyl-1H-benzotriazole-1yl-acetate was reacted with hydrazine hydrate in ethanolic solution. The resulting 2-(1H-benzotriazole-1-yl) aceto hydrazide was characterized by physical data and spectral studies and further it was condensed with 1H-indole-2,3-dione derivatives to form 2-(1H-benzotriazole-1-yl)-N'-[(3Z)-2-oxo-1,2-dihydro-3H-indol-3-ylidene] aceto hydrazide derivatives. These derivatives were characterized by melting point, TLC, IR, 1H-NMR and Mass spectrum. From the biological activity profile it was revealed that they have considerable anti-inflammatory activity & antimicrobial activity against S. aureus, B. subtilis, Klebsiella and E. Coli.