1




FOR IMMEDIATE RELEASE
TUESDAY, OCTOBER 27, 1998
- -------------------------


                    NANOPHASE ADOPTS STOCKHOLDER RIGHTS PLAN

         Burr Ridge, Illinois, October 27, 1998 -- Nanophase Technologies
Corporation (Nasdaq: NANX), a leader in developing and marketing advanced
materials using nanocrystalline compounds, today announced that its board of
directors has adopted a stockholder rights plan under which preferred stock
purchase rights will be distributed on November 10, 1998, at the rate of one
right for each outstanding share of the company's common stock, to stockholders
of record on that date.

         Leonard A. Batterson, chairman of the board of directors, stated that
"the board adopted the new plan to protect against future abusive takeover
tactics such as partial tender offers and selective open market purchases. The
plan was not adopted in response to any specific effort to acquire control of
the company, and the board is not aware of any such effort. The plan is intended
to assure that stockholders receive fair and equitable treatment in the event of
unsolicited attempts to acquire the company." Mr. Batterson further stressed
that "the plan is not intended to prevent an acquisition of the company on terms
that are favorable and fair to all stockholders, and will not do so. The plan is
designed to deal with the very serious problem of unilateral actions by hostile
acquirors that are calculated to deprive the company's board and its
stockholders of their ability to determine the destiny of the company."

         Generally, the rights will not be triggered unless a person or group
acquires 15% or more of the company's common stock or announces a tender offer
upon consummation of which such person or group would own 15% or more of the
common stock.


   2




         The rights will expire in ten years unless earlier redeemed or
terminated. The company generally may amend the rights or redeem the rights at
$0.01 per right at any time prior to the time a person or group has acquired 15%
of the company's common stock.

         Additional detail regarding the rights plan will be outlined in a
summary to be mailed to all stockholders following the record date.

         Nanophase Technologies Corporation develops and markets engineered
advanced materials for a variety of product applications in the electronics,
structural ceramics, cosmetics and industrial catalysts industries. Using
proprietary technology to alter materials at the molecular level, the company
creates products with unique performance attributes. The company's global
customer base includes a number of Fortune 500 companies. Nanophase trades on
the Nasdaq NMS under the symbol "NANX." Visit the company's web site at
www.nanophase.com.