Diclofenac sodium is being used for its anti-inflammatory actions since 28 years, but as all the NSAIDs are suffering from the deadlier GI toxicities, diclofenac sodium is also not an exception to these toxicities. The free -COOH group is thought to be responsible for the GI toxicity associated with all traditional NSAIDs. In the present research work, the main motto was to develop new chemical entities as potential anti-inflammatory agents with no GI toxicities. In this paper, the results of synthesis and pharmacological screening of a series of S-substituted phenacyl 1,3,4-oxadiazoles and Schiff bases derived from 2-[(2,6-dichloroanilino) phenyl] acetic acid (diclofenac acid) are described. The 1,3,4-oxadiazoles and diclofenac moieties are important because of their versatile biological actions. In the present studies, the oxadiazole system has been functionalized onto the diclofenac acid moiety and 18 compounds in this series were synthesized. The structures of new compounds are characterized by TLC, FTIR, 1H NMR and Mass spectral data. These compounds were tested in vivo for their anti-inflammatory activity. The compounds, which showed significant activity (comparable to the standard drug diclofenac sodium), were screened for their analgesic activity and to check their ability to induce ulcers by ulcerogenicity and histopathology studies. Eight new compounds, out of 18, were found to have significant anti-inflammatory activity in the carrageenan induced rat paw oedema model, with significant analgesic activity in the acetic acid induced writhing model with no ulcerogenicity. The compounds, which showed negligible ulcerogenic action, also showed promising results in histopathology studies, that is, they were found to be causing no mucosal injury.