An electrophotographic coating composition comprising finely-divided photoconductive perylene pigment dispersed in a solvent solution of polymeric binder is prepared by the steps of (1) milling a perylene pigment with milling media comprising inorganic salt and non-conducting particles under shear conditions in the substantial absence of the solvent to provide pigment having a particle size up to 0.2 micrometer, (2) continuing the milling at higher shear at a temperature up to about 50.degree. C., to achieve a perceptible color change of the pigment particles, (3) rapidly reducing the temperature of the milled pigment by at least 10.degree. C., (4) separating the milled pigment from the media and (5) mixing the milled pigment with the solvent solution of polymeric binder to form the coating composition. A very high degree of dispersion of photoconductive perylene pigment in solvent solution of polymeric binder is achieved by this method.