Benzothiazole derivative are well known to posses wide varieties of pharmacological activities. One of the ways to increase the drug efficiency is the formation of inclusion complex. The compounds 2-[5’-benzylidene-2’-phenyl-4’-oxo-1’, 3’-thiazolidine]-1, 3- benzothiazole and 2-[5’-(o-nitrobenzylidene)-2’-phenyl-4’-oxo-1’, 3’-thiazolidine]-1, 3- benzothiazole have been synthesized by using suitable procedure starting from 2- aminobenzothiazole.The inclusion complexes of each drug has been prepared with β- cyclodextrin to increase their solubility and bioaccesibility in polar medium. Their formation have been ascertained by studying the physico-chemical properties like spectral characteristics, thermodynamic parameters etc. Further, the pharmacological activities of the compounds and their inclusion complexes have been evaluated. It is found that inclusion complexes formation increases the pharmacological activities significantly.