December 2, 2003

News Release: Court Orders Final Approval of Nanophase Technologies Litigation Settlement

Nanophase Technologies Corporation (Nasdaq: NANX), a technology leader in nanomaterials and nanoengineered products, today announced that following a hearing on December 1, 2003, the United States District Court for the Northern District of Illinois ordered final approval of a $2,500,000 settlement of the securities class action lawsuit filed against the Company and certain of its current and former officers. As more fully described in the Company's Annual Report on Form 10-K, the suit arose from plaintiffs'allegations concerning the Company's public disclosures regarding its dealings with Celox, a British customer. Under the terms of the Stipulation of Settlement given final approval by the court, the settlement successfully resolves all claims against all defendants, without any admission of liability or other wrongdoing by any party. Because the settlement has been funded by the Company's directors and officers liability insurance, the settlement will not have a material adverse effect on Nanophase's financial position, cash Company.

'We believe that settlement of this litigation for an amount within insurance policy limits advances our shareholders'best interests,'said Joseph Cross, Nanophase's President and CEO. 'We would like our shareholders to know that a separate suit filed by Nanophase against Celox recently resulted in a $400,680 judgment in Nanophase's favor, collection of which is unlikely. The Company regards this judgment as confirming the integrity of its prior public disclosures about Celox's contractual commitments to Nanophase. Such confirmation enhances the benefit of avoiding any distraction that could result from continued litigation of the class action. The settlement achieves this objective and permits us to focus our attention exclusively on the Company's business development opportunities and efforts toward increasing our product revenues during 2004. Management continues to recognize that revenue growth and further extending our technology and lead in the field of nanomaterials is the optimum path toward maximizing shareholder value.'

Nanophase Technologies (NANX), www.nanophase.com , provides nanoengineered solutions of nanostructured materials for a variety of industrial product applications. Using patented and proprietary integrated nanotechnologies, the Company creates products with unique performance attributes. Nanophase Technologies currently owns or licenses 22 United States patents and patent applications, consisting of 8 owned United States patents, 8 owned United States patent applications, and 6 licensed United States patents. The Company also has 24 foreign patents and patent applications, consisting of 9 owned foreign patents and 15 owned foreign patent applications, all of which are counterparts to domestic filings covering its platform of nanotechnologies.

This press release contains words such as 'expects', 'anticipates', 'plans', 'forecasts'and similar expressions that are intended to identify forward-looking statements within the meaning of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Such statements in this announcement are made based on the Company's current beliefs, known events and circumstances at the time of publication, and as such, are subject in the future to unforeseen risks and uncertainties. It is possible that the Company's future performance may differ materially from current expectations expressed in these forward-looking statements due to a variety of important factors such as: a customer's decision to defer, cancel or otherwise modify a purchase order or supply agreement; demand for, and acceptance of, the Company's nanocrystalline materials; changes in our development, supply and distribution relationships; increasing price and product/service competition by foreign and domestic competitors, including new entrants; technological developments and changes; the ability to continue to introduce competitive new products and services on a timely, cost effective basis; the Company's mix of products/services; increases in raw material costs which cannot be recovered in product pricing; domestic and foreign governmental and public policy changes including environmental regulations; disruption of commercial activities and threats associated with terrorism and efforts to combat it; protection and validity of patent and other intellectual property rights; the cyclical nature of the Company's business; the outcome of pending and future litigation and governmental proceedings; and other risks described in the Company's filings with the Securities and Exchange Commission. In addition, the Company's forward-looking statements could be affected by general industry and market conditions and growth rates. The Company undertakes no obligation to update or revise these forward-looking statements to reflect new events, uncertainties or other contingencies.

SOURCE Nanophase Technologies Corporation

Joseph Cross, President, CEO, +1-630-771-6705, or Jess Jankowski, VP, and Controller, +1-630-771-6702, or Nancy Baldwin, Investor Relations, +1-630-771-6707, all of Nanophase Technologies Corporation



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