The present invention relates to an improved process for preparation of Rivastigmine of formula (I) or pharmaceutically acceptable salts thereof comprising a step of N-methylation of compound of formula (III), wherein R.sub.1=R.sub.2=H or R.sub.1=H and R.sub.2=CH.sub.3 or an acid addition salt thereof, using paraformaldehyde in the presence of Raney Nickel and hydrogen in a suitable solvent to obtain compound of formula (II).