A turbocharger having a variable nozzle with stepped two-stage vanes (50), the variable nozzle comprising a tubular piston (70) disposed in the bore (44) of the turbine housing (38) such that the piston (70) is axially slidable adjacent to the vanes (50) that extend across the nozzle. Each vane defines a first vane stage (50a) proximate the free end of the vane, the second vane stage (50b) having a different aerodynamic contour in comparison with the first vane stage (50a), each vane comprising a step (60) transitioning from the first vane stage (50a) to the second vane stage (50b). The piston (70) in a closed position closes the second vane stage (50b) so that exhaust gas flows only through the first vane stage (50a). The second vane stage (50b) is progressively opened as the piston (70) is axially slid toward an open position.