2-Hydroxy-1-naphthonitrile (1) on treatment with different α-haloketones affords corresponding 2-acyl-3-aminonaphtho[2,1- b ]furans (2a-2d). The compounds 2a-2d on reacting with ammonium thiocyanate and benzoyl chloride produce N-acyl-N1-(2-acylnaphtho[2,1- b ] furan)thiourea (3a-3d), which on further refluxing with sodium hydroxide yield 2-mercapto-4-acylnaphtho[2,1- b ]furo[3,2-d]pyrimidines (4a-4d). These on stirring with chloroacetic acid give S-(4-acylnaphtho[2,1- b ]furo[3,2-d]pyrimidine)-mercaptoacetic acid (5a-5d). The structures of newly synthesized compounds have been established by elemental analysis and spectral studies. In addition, they have been screened for antimicrobial, diuretic, and antiinflammatory activities. The compounds 4c, d, 5c and 5d were found to be active against bacteria and fungi. The compounds 4c, 5a, 5c, and 5d showed significant diuretic activity having T/S values of 0.89, 0.68, 0.62, and 0.68, respectively. The compounds 5c and 5d showed considerable antiinflammatory activity having percentage protection value of 55.64 and 63.7.