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The current work describes a unique iodine-mediated intra-molecular rearrangement of amide to nitrile and thiourea to urea, which took place simultaneously in thiophenes. The thiophenes having amide and amine groups at the adjacent positions were prepared via the Gewald reaction and subsequently treated with isothiocyanates in the presence of molecular iodine to get 1-(3-cyanothiophen-2-yl)-3-phenylureas in good yields. The synthesized compounds are of particular interest both chemically and biologically, as they contain thiophene, urea, and nitrile moieties in a single molecule. Many thiophene derivatives have been reported to exhibit antioxidant properties. Hence, the synthesized molecules were screened for their antioxidant activity by means of scavenger activity towards 2,2-diphenyl-1-picrylhydrazyl (DPPH) and the Ferric Ion Reducing Power (FRAP) assay. Some compounds exhibited promising antioxidant properties.