The evolution of entanglement in a 3-spin chain with nearest-neighbor Heisenberg-XY interactions for different initial states is investigated here. In an NMR experimental implementation, we generate multipartite entangled states starting from initial separable pseudo-pure states by simulating nearest-neighbor XY interactions in a 3-spin linear chain of nuclear spin qubits. For simulating XY interactions, we follow algebraic method of Zhang et al. [Phys. Rev. A 72, 012331 (2005)]. Bell state between end qubits has been generated by using only the unitary evolution of the XY Hamiltonian. For generating W-state and GHZ-state a single qubit rotation is applied on second and all the three qubits respectively after the unitary evolution of the XY Hamiltonian.