The present invention describes a process for preparing 5-(2-(4-1,2-benzisothiazol-3-yl)piperazinyl)ethyl)-6-chloro-1,3-dihydro-2H-indol-2-one (Ziprasidone) monohydrochloride hydrate or a pharmaceutically acceptable acid addition salt thereof, which is well known agent for treating various disorders including schizophrenia, migraine pain and anxiety. The manufacturing process of Ziprasidone comprises the reaction of hydrochloride salt of 1,2-benzisothiazole-3-piprazinyl with 2-Chloroethyl-6-chlorooxindole in aqueous sodium carbonate solution. Its hydrochloride salt is prepared in aqueous methanol using hydrogen chloride.