The present invention provides a novel process for preparation of Raloxifene hydrochloride (Ia) comprising reaction of 2-(4- hydroxyphenyl) benzo [b] thiophene of formula (II) with 4-[2-(l-piperidinyl)-ethoxy]-phenyl] benzoic acid (III) using Eatons reagent. The resulting compound, 6-methanesulfonyloxy-2-(4-methanesulfonyloxyphenyl)-3-[4-(2-piperidinoethoxy) benzoyl]benzo[b]thiophene of formula (III), after deprotection of the methanesulfonyl groups, and treatment with hydrochloric acid yields Raloxifene hydrochloride of formula (Ia) having desired purity..