A cost-effective, scalable, and environmentally benign process is herein reported for the synthesis of pantoprazole sodium sesquihydrate: 5-(difluromethoxy)-2-[{(3,4-dimethoxy-2-pyridinyl)methyl}sulfinyl]-1H-benzimidazole sodium sesquihydrate. At least two of the three main synthetic steps (coupling and oxidation) have been carried out for the first time in water, with no need to isolate and purify the intermediates, affording the corresponding pantoprazole sodium in good yield and purity. Minimum organic solvents, in terms of both the number of solvents and the volume of solvent used, are employed to make this process both economical and environment friendly. Furthermore, in situ transformation of pantoprazole sodium heterosolvate, due to the association between molecules of water and solvent used, to pantoprazole sodium sesquihydrate is described.