Quinoline heterocycles found to have diverse biological activities and 3-functionalised quinolines are important intermediates for the synthesis of various quinoline derivatives. 3-acetyl-4-hydroxy-quinolin-2(1H)-one and 6-chloro-3-acetyl-4-phenyl-2-methyl quinoline were chosen as intermediates for the synthesis of some novel quinoline derivatives. In particular, only a few methods are available for the synthesis of 3-acetyl-4-hydroxy-quinolin-2(1H)-one, which involve either two step or multistep reaction protocols. In the present work, a rapid, efficient and one pot procedure for the synthesis of 3-acetyl-4-hydroxy-quinolin-2(1H)-ones has been developed both by conventional and microwave assisted synthesis. The 3-acetyl quinolines were converted into chalcones which in turn converted to quinoline-3-yl pyrazolines and quinoline-3-yl isoxazolines and a few into 3-(2, 4-substitutedstyryl)isoxazolo[4,5-c]quinolin-4(5H)-ones. These compounds were explored for their anti-microbial and cyctotoxicity studies.