Disclosed herein is a novel process for preparation of atovaquone. The process includes reacting 1,4-naphthoquinone with trans-4-(4-chlorophenyl) cyclohexane carboxylic acid followed by halogenation to obtain a dihalo-compound. Further, dehydrohalogenation of the dihalo-compound produces a monohalogeno-compound which under goes hydrolysis to produce atovaquone. The invention also discloses atovaquone in a substantially pure and well defined polymorphic form designated as “Form IPCA-ATO,” and the preparation thereof.