PURPOSE: To obtain the titled compound useful as a raw material for a feed additive for animals in high purity and in high yield, by reacting diketene continuously in a surplus state in a reaction process with a monoethanolamine finally in excess of a specific amount, in a reaction solvent.

CONSTITUTION: Diketene is reacted with monoethanolamine in the presence of 1W4C alcohol such as acetone or acetonitrile to give N-(2-hydroxyethyl) acetoacetic acid amide. In the reaction, diketene and monoethanolamine are fed to the reaction system in such a way that diketene is continuously in excess in the reaction process and finally 0.01W1% surplus amount based on the theoretical amount of diketene of monoethanolamine is fed to the reaction system. By this method, after the reaction, the aimed compound is obtained only by distilling away the solvent without requiring purification.