Exhibit 99.1

NANOPHASE ANNOUNCES RECORD QUARTERLY REVENUE

• Record 2Q and first half revenue

• 73% second quarter revenue growth year-over-year

• Dollar gross margin increases 178% year-over-year

• Company’s losses down 79% year-over-year

Romeoville, IL, July 26, 2007 — Nanophase Technologies (Nasdaq: NANX), a technology leader in nanomaterials and advanced nanoengineered products, announced the highest quarter revenues in the Company’s history for the second quarter of 2007. The second quarter of 2007 is the company’s tenth consecutive quarter of record year-over-year revenue.

“Nanophase achieved substantial second quarter and first half revenue growth year-over-year, while making progress with new market initiatives, securing new customers through our market partners, and ramping new products in production,” stated Joseph Cross, Nanophase’s president and CEO. “We believe our focused sales and manufacturing initiatives are allowing the company to gain solid traction in several markets.”

For the quarter ending June 30, 2007, total revenue increased to $4.13 million compared with $2.39 million for the second quarter of 2006, representing 73% revenue growth year-over-year. Gross margin for the second quarter 2007 increased to 37% of revenue, or $1.51 million, versus 23% of revenue in the second quarter of 2006, or $0.55 million, representing an improvement of 178% in gross margin dollar growth. Nanophase reported a second quarter 2007 net loss of $0.24 million, or $0.01 per share compared to a loss of $1.14 million, or $0.06 per share, in the second quarter of 2006, reducing the Company’s quarterly loss by 79% year-over-year.

“Nanophase’s ongoing initiatives for continuous improvement of our manufacturing processes, combined with generating increased sales and resultant volume, have driven up revenue and driven down cost,” explained Cross. “This has had a positive impact on our ability to grow margins.”

For the six months of 2007, revenue increased to $7.0 million, a six month revenue record for the Company, compared with $4.4 million in the first six months of 2006, representing growth of 60% year-over-year. Gross margin for the first half 2007 increased to $2.23 million, or 32% of revenue, compared to $0.89 million in the first half of 2006, or 20% of revenue, increasing 153% year-over-year in gross margin dollars. Nanophase reported a first half 2007 net loss of $1.5 million, or $0.08 per share, versus $2.7 million in the first half of 2006, or $0.15 per share, representing a reduction in loss of $1.2 million, or 45%.

Cross noted: “Revenue growth has been primarily driven by increasing sales in architectural coatings, both interior and exterior, and industrial coatings in the U.S. and Europe. Comparing the first half of 2007 to the same period in 2006 for our primary markets, sales to industrial coatings increased over 1000%, while revenue for architectural coatings increased more than 300%. We continue to believe that the adoption rate for nanomaterials is increasing and remain positive on long-term revenue growth. With the completion and closing of our shelf registration, and the accompanying proceeds, Nanophase has over $17 million in cash to fund the resources to manage growth, both equipment and facilities, and meet customer demand.”

Nanophase noted that the Company ramped-up manufacturing and delivered six new commercial nanomaterial dispersion products during the first half 2007 while achieving 98.1% Customer Service levels with zero customer returns. Based on third party audits, Nanophase was also recertified to ISO9001-2000, the International Quality Management System standard, and ISO 14001, the International Environmental Management Standard.

Nanophase has scheduled its quarterly conference call for July 26 at 4:00 PM CDT, 5:00 PM EDT, which will be hosted by Joseph Cross, president and CEO, and Jess Jankowski, CFO. The call may be accessed through the Company’s website, www.nanophase.com, and clicking on the link under Investor Relations and Calendar of Events. If you are unable to attend, a replay will be available through August 2, 2007 by dialing 706-645-9291 and entering code 10459687, or by logging onto the Company’s website and following the above directions.

Nanophase Technologies Corporation (NANX), www.nanophase.com, is a leader in nanomaterials technologies and 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 and ISO 14001 facilities. Nanophase delivers commercial quantity and quality nanoparticles, coated nanoparticles, and nanoparticle dispersions in a variety of media. The Company owns or licenses 18 United States and 49 foreign patents and patent applications. Information about Nanophase may be found in the Company’s public filings or on its website.

Based on the financial data accompanying this release, results are stated in approximate terms with earnings per share fully diluted. This press release contains words such as “expects”, “shall”, “will” , “believes” 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 that could cause the Company’s results of operations, performance and achievements to differ materially from current expectations expressed in, or implied by, these forward-looking statements. These risk and uncertainties include the following: a decision by a customer to cancel a purchase order or supply agreement in light of the Company’s dependence on a limited number of key customers; uncertain demand for, and acceptance of, the Company’s nanocrystalline materials; the Company’s manufacturing capacity and product mix flexibility in light of customer demand; the Company’s limited marketing experience; changes in development and distribution relationships; the impact of competitive products and technologies; the Company’s dependence on patents and protection of proprietary information; the resolution of litigation in which the Company may become involved; and other risks described in the Company’s Form 10K filed March 14, 2007, and other 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. Except as required by federal securities laws, the Company undertakes no obligation to update or revise these forward-looking statements to reflect new events, uncertainties or other contingencies.

NANOPHASE TECHNOLOGIES CORPORATION

BALANCE SHEETS

(Unaudited)

	June 30,			December 31,
	2007			2006
ASSETS
Current assets:
Cash and cash equivalents	$	982,685		$	132,387
Investments		5,608,520			8,434,793
Trade accounts receivable, less allowance for doubtful accounts of $13,000 and $22,000 on June 30, 2007 and December 31, 2006, respectively		2,504,645			1,459,391
Inventories, net		1,365,898			923,223
Prepaid expenses and other current assets		541,289			534,407
Total current assets		11,003,037			11,484,201
Equipment and leasehold improvements, net		7,389,405			7,608,326
Other assets, net		744,064			651,218
	$	19,136,506		$	19,743,745
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of deferred other revenue		127,273			127,273
Current portion of capital lease obligations		41,212			32,972
Accounts payable		1,003,554			478,694
Accrued expenses		1,426,502			1,643,585
Total current liabilities		2,598,541			2,282,524
Long-term debt, less current maturities and unamortized debt discount		1,446,151			1,383,707
Long-term portion of capital lease obligations		53,471			50,552
Deferred other revenue, less current portion		137,879			201,515
		1,637,501			1,635,774
Contingent liabilities:		—			—
Stockholders’ equity:
Preferred stock, $.01 par value, 24,088 shares authorized and no shares issued and outstanding		—			—
Common stock, $.01 par value, 30,000,000 shares authorized; 19,080,495 and 18,995,581 shares issued and outstanding on June 30, 2007 and December 31, 2006, respectively		190,805			189,956
Additional paid-in capital		78,920,583			78,380,962
Accumulated deficit		(64,210,924	)		(62,745,471	)
Total stockholders’ equity		14,900,464			15,825,447
	$	19,136,506		$	19,743,745

NANOPHASE TECHNOLOGIES CORPORATION

STATEMENTS OF OPERATIONS

(Unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
Revenue:
Product revenue, net	$	4,015,275		$	2,298,315		$	6,809,416		$	4,216,362
Other revenue		110,233			92,587			222,529			180,109
Total revenue		4,125,508			2,390,902			7,031,945			4,396,471
Operating expense:
Cost of revenue		2,611,249			1,846,678			4,804,524			3,514,429
Gross Profit		1,514,259			544,224			2,227,421			882,042
Research and development expense		450,005			487,133			974,169			1,034,279
Selling, general and administrative expense		1,360,957			1,241,403			2,771,217			2,628,857
Loss from operations		(296,703	)		(1,184,312	)		(1,517,965	)		(2,781,094	)
Interest income		89,202			74,769			188,829			157,482
Interest expense		(34,173	)		(30,391	)		(67,220	)		(61,615	)
Other, net		248			943			(69,097	)		2,983
Loss before provision for income taxes		(241,426	)		(1,138,991	)		(1,465,453	)		(2,682,244	)
Provision for income taxes		—			—			—			—
Net loss	$	(241,426	)	$	(1,138,991	)	$	(1,465,453	)	$	(2,682,244	)
Net loss per share- basic and diluted	$	(0.01	)	$	(0.06	)	$	(0.08	)	$	(0.15	)
Weighted average number of common shares outstanding		19,070,236			18,009,155			19,038,217			18,001,238

NANOPHASE TECHNOLOGIES CORPORATION

STATEMENTS OF OPERATIONS — EXPANDED SCHEDULE

(Unaudited)

	Three months ended						Six months ended
	June 30,						June 30,
	2007			2006			2007			2006
Revenue:
Product revenue, net	$	4,015,275		$	2,298,315		$	6,809,416		$	4,216,362
Other revenue		110,233			92,587			222,529			180,109
Total revenue		4,125,508			2,390,902			7,031,945			4,396,471
Operating expense:
Cost of revenue detail:
Depreciation		278,052			227,732			558,133			457,310
Non-Cash equity compensation		13,488			6,028			27,889			15,266
Other costs of revenue		2,319,709			1,612,918			4,218,502			3,041,853
Cost of revenue		2,611,249			1,846,678			4,804,524			3,514,429
Gross profit		1,514,259			544,224			2,227,421			882,042
Research and development expense detail:
Depreciation		58,612			60,308			113,974			122,461
Non-Cash equity compensation		16,736			24,765			61,966			66,018
Other research and development expense		374,657			402,060			798,229			845,800
Research and development expense		450,005			487,133			974,169			1,034,279
Selling, general and administrative expense detail:
Depreciation and amortization		19,727			17,487			38,824			33,480
Non-Cash equity compensation		79,218			99,624			225,923			244,362
Other selling, general and administrative expense		1,262,012			1,124,292			2,506,470			2,351,015
Selling, general and administrative expense		1,360,957			1,241,403			2,771,217			2,628,857
Loss from operations		(296,703	)		(1,184,312	)		(1,517,965	)		(2,781,094	)
Interest income		89,202			74,769			188,829			157,482
Interest expense		(34,173	)		(30,391	)		(67,220	)		(61,615	)
Other, net		248			943			(69,097	)		2,983
Loss before provision for income taxes		(241,426	)		(1,138,991	)		(1,465,453	)		(2,682,244	)
Provision for income taxes		—			—			—			—
Net loss	$	(241,426	)	$	(1,138,991	)	$	(1,465,453	)	$	(2,682,244	)