Abstract. The present investigation was carried out to design, optimize, and evaluate lurasidone hydrochloride nanocrystals for improving its solubility and dissolution characteristics. Nanocrystals were prepared by media milling technique using zirconium oxide beads with 0.1 mm diameter. Various stabilizers, viz. poloxamer 188, PVP K30, SLS, HPMC E15, and PVP S 630 D, were evaluated to stabilize the nanocrystals. The Pareto chart obtained through Plackett-Burman screening design revealed that HPMC E 15 showed the highest standardized effect (p value <0.05) on percent dissolution efficiency at 2 min. In subsequent studies, a 3 2 factorial design was employed to quantify the effect of two independent variables, namely amount of stabilizer and milling time on predetermined response variables mean particle size, saturation solubility, and percent dissolution efficiency at 2 min. Statistical analysis of the factorial design revealed that all predetermined response variables were significantly dependent (p value <0.05) on the independent variables. The observed response of the optimized batch prepared as per the desirability function was in close agreement with predicted response, and mathematical model generated was validated. The optimized batch was lyophilized, and X-ray powder diffraction studies indicated that there was no substantial change in crystallinity of the drug. The optimized formulation showed mean particle size of 228 nm and released almost all the drug within first 5 min. Since the crystallinity of the drug is maintained, improvement in saturation solubility and dissolution efficiency could be attributed to decrease in mean particle size of the drug.