A series of 2-(Benzothiazolyl-2’)azino-5- arylidene -4-thiazolidinones have been synthesized starting from 2- hydrazinobenzothizole .To enhance the solubility of these synthesized compounds the inclusion complexes were prepared with β-cyclodextrin. The synthesis of compounds and their inclusion complexes have been ascertained from the changes in spectral characteristics and their analytical data. The compounds and their inclusion complexes were screened for their possible antibacterial activity against Escherichia coli and Staphylococcus aureus, by using cup plate method. From the results of their antibacterial study it was observed that the inclusion complexes displayed better antibacterial activity as compared with their respective compounds.