The present invention relates to a process for preparing Ziprasidone of formula I, or a pharmaceutically acceptable salt or a solvate or a hydrate thereof; comprising the steps of reacting 1-(1,2-benzisothiazol-3-yl) piperazine of formula II or its salt: with 5-(2-haloethyl)-6-chloro-oxindole of formula III: wherein X is leaving groups like fluoro, chloro, bromo, iodo or sulphonyl; in the presence of a dispersing agent and a base in a solvent to form ziprasidone of formula I; and optionally converting the ziprasidone formed into a pharmaceutically acceptable acid addition salts of ziprasidone; or a solvate or a hydrate thereof.