This paper examines the potential impact of the European Union’s Environmental Liability Directive (ELD) 1 on the nanotechnology (NT) sector. In terms of risk governance the ELD represents a new paradigm, affording the environment an enhanced status both in legal and indeed ontological terms. However, the nature of the NT industry itself is such as to create complexity in the implementation of the ELD. Whilst the field of nano-toxicology is making advances, debate still prevails around issues pertaining to exposure, (eco)-toxicity, metrics, potential impact and legal causation. Levels of uncertainty remain high and hence measuring environmental impact is problematic. The paper addresses the potential environmental liability exposures of NT manufacturers and producers pursuant to the provisions of the ELD and by extension highlights the importance of the insurability of the liability risk all of which bears significance for the sustainability of the industry. It also examines the legal and regulatory challenges of the application of the ELD in the context of the NT industry, highlighting the challenges which this pervasive technology presents for regulatory policy. A cursory discussion of the legal theoretical underpinning of the directive helps to explain the rationale of the directive.