A thoroughly optimized and robust process for the synthesis of 1-benzylazetidin-3-ol has been emphasized. 1-Benzylazetidin-3-ol has been utilized as a starting material in the commercial synthesis of azetidin-3-ol hydrochloride. Synthesis of azetidin-3-ol hydrochloride involves the usage of very low cost and commercially available starting material (benzylamine) and with reduced formation of di(3-chloro-2-hydroxypropyl) benzylamine significantly resulting in an economical process that allows the effective production of 1-benzyl azetidin-3-ol as well as azetidin-3-ol hydrochloride.