The present study deals with the synthesis of novel spiro[azetidine-2,30 -indole]-20 ,4(10 H)-dione derivative from the reactions of 3-(phenylimino)-1,3-dihydro-2Hindol-2-one derivatives with chloracetyl chloride in the presence of triethylamine (TEA). All the compounds were characterized using IR, 1 H-NMR, MS, and elemental analysis. They were screened for their antibacterial and antifungal activities. The bacterial strains used were Grampositive Staphylococcus aureus (MTCC-96) and Gramnegative Escherichia coli (MTCC-521) and Pseudomonas aeruginosa (MTCC-647). The antifungal screening was done on Candida albicans (MTCC-183) and Asperigillus niger (MTCC-343) fungal strains. Results revealed that, compounds (7a), (7b), (7c), (7d), and (7e) showed very good activity with MIC value of 6.25–12.5 lg/ml against three evaluated bacterial strains and the remaining compounds showed good to moderate activity comparable to standard drugs as antibacterial agents. Compounds (7c) and (7h) displayed equipotent antifungal activity in comparison to standard drugs. Amoxicillin, gentamycin, and streptomycin were used as standard drugs for antibacterial activity while fluconazole and itraconazole were used as standard drugs for antifungal activity. Structure–activity relationship study of the compounds showed that the presence of electron withdrawing group substitution at 50 and 70 positions of indoline ring and on ortho or para position of phenyl ring increases both antibacterial and antifungal activity of the compound. Henceforth, our findings will have a good impact on chemists and biochemists for further investigations in search of spiro-fused antimicrobial agents.