1,3-Dipolar cycloaddition reaction of 2-(arylmethylene)-2,3-dihydro-1H-inden-1-ones 1a-g with non-stabilized azomethine ylides, generated in situ via decarboxylative condensation of isatins 2a,b and sarcosine (3) afforded dispiro[1H-indene-2,3'-pyrrolidine-2',3''-[3H]indole]-1,2''(1''H)-diones 4a-n and not the isomeric forms dispiro[1H-indene-2,4'-pyrrolidine-2',3''-[3H]indole]-1,2''(1''H)-diones 5 in a highly regioselective manner. Anti-tumor activity screening for the synthesized compounds (4c,d,i-l) at a dose of 10 microM utilizing 56 different human tumor cell lines representing, leukemia, melanoma and cancers of the lung, colon, brain, ovary, breast, prostate and kidney was carried out. All the tested compounds exhibit promising anti-tumor activity against SK-MEL-2 (melanoma) cell line. Anti-inflammatory activity of the prepared compounds was determined in vivo by the acute carrageenan-induced paw oedema in rats. Many of the prepared compounds exhibit considerable anti-inflammatory properties "at a dose of 50 mg/kg body weight", especially 4a and 4m which reveal remarkable activities relative to indomethacin which was used as a reference standard in this study.