2-Arylidene-4-(4-phenoxy-phenyl)but-3-en-4-olides (1-17) were prepared from 3-(4-phenoxy-benzoyl)propionic acid and aromatic aldehydes. Some of the selected butenolides were reacted with ammonia and benzylamine to give corresponding 3-arylidene-5-(4-phenoxy-phenyl)-2(3H)-pyrrolones (18-23) and 3-arylidene-5-(4-phenoxy-phenyl)-1-benzyl-2(3H)-pyrrolones (24-29) respectively, which were characterized on the basis of 1H-, 13C-NMR, Mass spectrometric data and elemental analysis results. These compounds were tested for anti-inflammatory and antimicrobial actions. The compounds, which showed significant anti-inflammatory activity, were screened for their analgesic and ulcerogenic activities. Five new compounds (5, 6, 7, 25 and 26), out of 29 showed very good anti-inflammatory activity in the carrageenan induced rat paw edema test, with significant analgesic activity in the acetic acid induced writhing test together with negligible ulcerogenic action. Antibacterial activity against Staphylococcus aureus and Escherichia coli as well as antifungal activity against Candida albicans were expressed as the corresponding minimum inhibitory concentration (MIC) values. Compound 21, 22 and 23 showed excellent activity against C. albicans with MIC-10 microg/ml. Out of the above-mentioned compounds, 22 and 23 also showed good activity against S. aureus with MIC-20 and 15 microg/ml respectively.