Romeoville, IL, July 21, 2004 – Nanophase Technologies (Nasdaq: NANX), a nanomaterial technology leader, developer and commercial manufacturer, announced second quarter 2004 results. Based on the financial data accompanying this release, the Company’s results are stated approximately as follows.

For the quarter ended June 30, 2004, total revenue rose to $1.54 million compared with $1.31 million in the same quarter of 2003, or an increase of 18%. Nanophase reported a second quarter 2004 net loss of $1.45 million, or $0.08 per share (fully diluted), compared with a net loss for the first quarter of 2003 of $1.56 million, or $0.10 per share (fully diluted). The Company noted that second quarter revenues increased 19% sequentially over the first quarter of 2004.

“Nanophase had a solid second quarter, both in operations and engineering, and in its business development and sales efforts directed to revenue growth”, stated Joseph Cross, president and CEO. “During the second quarter, Nanophase’s customer for sunscreen nanomaterials increased its annual purchase order for 2004 by 13%; the Company signed a joint development agreement with Huber Engineered Materials to develop ‘nanomaterial solution’ ingredients for the personal care market; and noted the release of BYK Chemie’s initial two nano-additive products as a result of the Company’s partnership with ALTANA.” Cross noted that Nanophase had shipped initial orders of nanomaterials to BYK Chemie during the second quarter.

“Operationally, Nanophase continues to make excellent progress in six-sigma Lean Manufacturing initiatives to reduce variable manufacturing cost and develop innovative nanomaterials, such as the recently announced 20 nanometer alumina, for new target markets. Nanophase is completing a series of process improvements that are targeted to increase PVS reactor output by 20-30% in conjunction with a re-engineering program that has reduced the expected operational labor cost by 25%. The Company expects to maintain an aggressive schedule for new nanomaterial development for targeted applications and new markets throughout 2004.”

Nanophase Technologies (NANX), www.nanophase.com, provides nanoengineered solutions for multiple industrial product applications. Using a platform of patented and proprietary integrated nanomaterial technologies, the Company creates products with unique performance attributes from two ISO 9001:2000 facilities. Nanophase delivers commercial quantity and quality nanoparticles, coated nanoparticles, and nanoparticle dispersions in a variety of media. The Company owns or licenses 25 United States patents and patent applications and 41 foreign patents and patent applications. Information about Nanophase may be found in the Company’s public filings. Other information on our website is not incorporated by reference into, and should not be considered a part of, this press release.