This report presents priorities for new facilities and new capabilities at existing facilities with initial costs of at least $5 million. The new facilities in order of priority are: (1) a 6 GeV synchrotron radiation facility; (2) an advanced steady state neutron facility; (3) a 1 to 2 GeV synchrotron radiation facility; and (4) a high intensity pulsed neutron facility. The new capabilities at existing facilities in order of priority are: (1) centers for cold neutron research, incorporating guide halls and instrumentation; (2) insertion devices on existing synchrotron radiation facilities; (3) an experimental hall and instrumentation at the Los Alamos National Laboratory pulsed neutron source; (4) upgrading of the National Magnet Laboratory; and (5) enriched pulsed neutron targets. The context of these recommended priorities is given in an executive summary, and more fully set out in the report's three chapters. Chapter I describes the nature and purpose of materials research and the status of several major research facilities in the United States and other countries. Chapter II outlines the research that has been done with existing facilities and that will be facilitated with the proposed new installations. Chapter III offers a fuller rationale for the priorities, briefly analyzes costs, and surveys facilities considered but not included in the priorities. (JN)