Recent advances in the preparation of nanoparticles of water-insoluble drugs, while remarkable, still largely require a secondary drying step to produce solid dosage forms. This report describes the novel extrusion of crystalline drug particles in a polymer/water matrix, which was developed as a comminution technique for particle size reduction. Itraconazole and hydroxypropyl methyl cellulose were used as a model drug and a matrix polymer, respectively. Nanocomposites of 400 nm itraconazole crystals were prepared successfully with significantly improved release kinetics. The water and polymer content should be optimized, and the repeated extrusion runs were beneficial for effective particle size reduction. This process produced nanocomposite granules, containing stable crystalline drug particles, which can be processed readily into a solid dosage form with a high drug content without a drying step.