SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                                   MFRI, INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                               36-3922969
 State or other jurisdiction of                                 (IRS Employer
 incorporation or organization)                              Identification No.)

                               7720 Lehigh Avenue
                              Niles, Illinois 60714
                    (Address, of principal executive offices)



                  2001 INDEPENDENT DIRECTORS STOCK OPTION PLAN
                            (Full title of the plan)

                                 Mr. David Unger
                       Chairman of the Board of Directors
                                   MFRI, Inc.
                               7720 Lehigh Avenue
                              Niles, Illinois 60714
                     (Name and address of agent for service)

                                  (847)966-1000
          (Telephone number, including area code, of agent for service)

                                    Copy to:

                               Hal M. Brown, Esq.
                                Piper Rudnick LLP
                            203 North LaSalle Street
                                   Suite 1900
                             Chicago, Illinois 60601
                                 (312) 368-4012
                           (312) 236-7516 (telecopier)
                         CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>

<CAPTION>
                                                                            Proposed maximum   Proposed maximum
               Title of each class of                     Amount to be       offering price        aggregate           Amount of
             securities to be registered                   registered         per share(1)     offering price(1)   registration fee
------------------------------------------------------------------------------------------------------------------------------------

Common Stock, par value
<S>                                                          <C>                <C>              <C>                   <C>
  $.01 per share....................................         100,000            $9.12            $556,280              $70.48
====================================================================================================================================
</TABLE>

(1)  Pursuant  to  Rule  457(c)  and  457(h),  the  registration  fee  has  been
     calculated  on the basis of the actual price per share  (ranging from $2.15
     to $3.12 per share) at which the  options may be  exercised  with regard to
     those options for which such  information is available,  and with regard to
     the remaining  shares,  on the basis of $9.12 per share, the average of the
     high and low sale  prices of the common  stock on  December  21,  2004,  as
     reported by the Nasdaq National Market System.

<PAGE>

                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT


Item 3.  Incorporation of Documents By Reference.

     The Company's  prospectus  dated January 21, 1994 filed with the Securities
and  Exchange  Commission  pursuant to Rule 424(b) under the  Securities  Act of
1933, as amended,  the Company's  Amended Annual Report on Form 10-K/A-2 for the
fiscal year ended January 31, 2004, the Company's  Quarterly Report on Form 10-Q
for the fiscal quarter ended April 30, 2004, and the Company's Amended Quarterly
Report  on  Form 10-Q/A   for  the  fiscal  quarter  ended  July  31,  2004  are
incorporated in this registration statement by reference.  All reports and proxy
statements filed by the Company pursuant to Sections 13(a),  13(c), 14 and 15(d)
of the Securities  Exchange Act of 1934  subsequent to the date hereof and prior
to the filing of a post-effective  amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold,  shall be deemed to be  incorporated  by reference in this  registration
statement and to be a part hereof from the date of filing of such documents.

Item 4.  Description of Securities.

         Not applicable.

Item 5.  Interests of Named Experts and Counsel.

     An opinion  with  respect  to the  legality  of the shares of common  stock
subject to stock  options is being given by Piper  Rudnick  LLP,  203 N. LaSalle
Street, Suite 1900, Chicago, Illinois, 60601, counsel for the Company.

Item 6.  Indemnification of Directors and Officers.

     Section  145  of  the   Delaware   General   Corporation   Law   authorizes
indemnification  of  directors,  officers,  employees and agents of the Company;
allows the  advancement of costs of defending  against  litigation;  and permits
companies incorporated in Delaware to purchase insurance on behalf of directors,
officers,  employees  and  agents  against  liabilities  whether  or  not in the
circumstances  such  companies  would have the power to  indemnify  against such
liabilities under the provisions of the statute.

     The Company's  Certificate  of  Incorporation  and its By-Laws  provide for
indemnification  of its officers and  directors to the full extent  permitted by
Section 145 of the Delaware General Corporation Law.

                                      II-2
<PAGE>

     The  Company's  Certificate  of  Incorporation  eliminates,  to the fullest
extent permitted by Delaware law,  liability of a director to the Company or its
stockholders for monetary damages for a breach of such director's fiduciary duty
of care except for  liability  where a director  (a) breaches his or her duty of
loyalty to the  Company or its  stockholders,  (b) fails to act in good faith or
engages in  intentional  misconduct or knowing  violation of law, (c) authorizes
payment of an illegal  dividend or a stock repurchase or (d) obtains an improper
personal  benefit.  While  liability for monetary  damages has been  eliminated,
equitable remedies such as injunctive relief or rescission remain available.  In
addition,  a director is not  relieved of his  responsibilities  under any other
law, including the federal securities laws.

     The  Company  has  entered  into  indemnification  agreements  in the  form
described  below  with each  person  who is  currently  a member of the Board of
Directors of the Company and will enter into such agreements with persons who in
the future  become  directors of the Company.  Such  indemnification  agreements
provide for indemnification  against any and all expenses incurred in connection
with, as well as any and all  judgments,  fines,  and amounts paid in settlement
resulting  from,  any  threatened,   pending,  or  completed  action,  suit,  or
proceeding,   whether  civil,   criminal,   administrative,   or   investigative
(collectively an "Action"), by reason of the fact that such director is or was a
director, officer, employee or agent of the Company, or is or was serving at the
request of the  Company as a  director,  officer,  employee  or agent of another
corporation,  partnership,  joint  venture,  trust,  or  other  enterprise.  The
indemnification   agreements   provide   that  if  any   payment,   advance   or
indemnification  of the director requires that he or she acted in good faith, in
a manner he or she  reasonably  believed  to be for or not  opposed  to the best
interests  of the  Company or  without  reasonable  cause to believe  his or her
conduct was  unlawful,  then it shall be presumed that he or she so acted unless
proven  otherwise  by  clear  and  convincing   evidence.   The  indemnification
agreements  also  provide  for  the  advancement  of  all  expenses,   including
reasonable  attorneys'  fees,  arising  from  the  investigation  of any  claim,
preparation  for  the  defense  or  defense  or  settlement  of an  Action.  The
indemnification  agreements  authorize the Company to participate in the defense
of any action and to assume  the  defense  thereof,  with  counsel  who shall be
reasonably  satisfactory  to the director,  provided that the director  shall be
entitled to  separate  counsel of his or her  choosing  if he or she  reasonably
believes that (i) there exists conflicting  interests between himself or herself
and the Company or other  parties  (the  defense of whom the Company  shall have
assumed) or (ii) there is any  substantial  likelihood  that the Company will be
financially   or  legally   unable  to  satisfy   its   obligations   under  the
Indemnification   Agreement.  The  indemnification  agreements  provide  that  a
director's   rights  under  such   contract  are  not  exclusive  of  any  other
indemnification  rights  he or she may have  under  any  provision  of law,  the
Company's  Certificate of  Incorporation  or By-laws,  the vote of the Company's
stockholders or disinterested directors, other agreements or otherwise.

Item 7.  Exemption from Registration Claimed.

         Not applicable.

                                      II-3
<PAGE>

Item 8.  Exhibits.

         Exhibits filed with this Amendment

          4    2001   Independent   Directors  Stock  Option  Plan,  as  amended
               [Incorporated  by  reference to Exhibit  (d)(5) of Form  SC-TO-1,
               filed May 25, 2001]

          5    Opinion of Piper Rudnick LLP

          23.1 Consent of Deloitte & Touche LLP

          23.2 Consent of Piper Rudnick LLP (contained in Exhibit 5 hereof)

          24   Power of  Attorney  of  directors  and  certain  officers  of the
               Company.


Item 9.  Undertakings.

     The undersigned registrant hereby undertakes (i) to file, during any period
in which  offers or sales are being made,  a  post-effective  amendment  to this
registration  statement to include any material  information with respect to the
plan of distribution not previously  disclosed in the registration  statement or
any material change to such information in the registration statement; (ii) that
for the purpose of determining  any liability  under the Securities Act of 1933,
each such  post-effective  amendment  shall be  deemed to be a new  registration
statement relating to the securities  offered therein,  and the offering of such
securities  at that time shall be deemed to be the  initial  bona fide  offering
thereof;  and (iii) to  remove from  registration  by means of a  post-effective
amendment  any of the  securities  being  registered  which remain unsold at the
termination of the offering.

     The  undersigned   registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
registrant's  annual report pursuant to  section 13(a)  or  section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee   benefit  plan's  annual  report  pursuant  to  section 15(d)  of  the
Securities  Exchange  Act of 1934)  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time  shall be  deemed to be the  initial  bona fide  offering  thereof.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such

                                      II-4
<PAGE>

director,  officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.


                                      II-5

<PAGE>
                                   SIGNATURES


     Pursuant to the  requirements of the Securities Act of 1933, the registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of Niles, State of Illinois, on December 21, 2004.

                                             MFRI, INC.



                                      By:   /s/ David Unger
                                            ------------------------------------
                                            David Unger
                                            Chairman of the Board and Chief
                                            Executive Officer

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
registration  statement  has been signed below by the  following  persons in the
capacities and on the date indicated.

 Signature                          Title                           Date
---------------------------  ------------------------------- ----===-----------
 David Unger*                Director and Chairman of the
                             Board of Directors (Principal
                             Executive Officer)                       +

 Michael D. Bennett*         Vice President, Secretary and
                             Treasurer (Principal Financial
                             and Accounting Officer)

 Arnold F. Brookstone*       Director                                 +

 Dennis Kessler*             Director                                 +

 Bradley E. Mautner*         Director                                 +

 Eugene Miller*              Director                                 +

 Stephen B. Schwartz*        Director                                 +


  * By:  /s/ David Unger     Individually and as Attorney-            +
       -------------------   in-fact
       David Unger

  + December 21, 2004

                                      II-6
<PAGE>

                                  EXHIBIT INDEX
                                  -------------

Exhibit No.
-----------

   4.1             2001 Independent Directors Stock Option Plan, as amended
                   [Incorporated by reference to Exhibit (d)(5) of Form
                   SC-TO-1, filed May 25, 2001]

   5               Opinion of Piper Rudnick LLP

   23.1            Consent of Deloitte & Touche LLP

   23.2            Consent of Piper Rudnick LLP (contained in Exhibit 5 hereof)

   24              Power of Attorney of directors and certain officers of the
                   Company

<PAGE>
                                                                       EXHIBIT 5

                        [LETTERHEAD OF PIPER RUDNICK LLP]

                                December 21, 2004

The Board of Directors
MFRI, Inc.
7720 Lehigh Avenue
Niles, Illinois 60714

Gentlemen:

     We have examined the registration statement to be filed with the Securities
and Exchange Commission on or about December 21, 2004 for registration under the
Securities Act of 1933, as amended, of 100,000 shares of common stock, par value
$0.01 per share ("Common  Stock"),  of MFRI, Inc. (the  "Company")  reserved for
issuance upon the exercise of options granted and to be granted  pursuant to the
Company's 2001  Independent  Directors  Stock Option Plan (the "2001 Plan").  We
have  examined  pertinent  corporate  documents  and  records  of  the  Company,
including its  Certificate of  Incorporation  and its By-Laws,  and we have made
such other  examinations  as we have deemed  necessary or appropriate as a basis
for the opinion hereinafter expressed.

     On the basis of the  foregoing,  we are of the opinion that the issuance of
the  aforesaid  shares of common stock to be offered by the Company  pursuant to
options  granted  or to be  granted  pursuant  to the 2001  Plan  has been  duly
authorized, and, when issued and sold upon the terms and conditions set forth in
the 2001 Plan and in the  options  granted  or to be  granted  thereunder,  such
shares will be legally issued, fully paid and non-assessable.

     We hereby  consent  to the  filing of this  opinion  as an  exhibit  to the
registration.

                                                  Very truly yours,

                                                  PIPER RUDNICK LLP



                                                  By: /s/ Hal M. Brown
                                                     --------------------------
                                                      Hal M. Brown, a partner
<PAGE>


                                                                    EXHIBIT 23.1

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this  Registration  Statement of
MFRI, Inc. on Form S-8 of our report dated May 12, 2004 (December 14, 2004 as to
Note 17),  relating to the consolidated  financial  statements of MFRI, Inc. and
subsidiaries  as of and for the  year  ended  January  31,  2004  (which  report
expresses an unqualified opinion and includes explanatory  paragraphs as to MFRI
Inc. s change in its method of accounting for goodwill and intangible assets and
restatement  of its balance sheet  discussed in Note 17) appearing in the Annual
Report on  Form 10-K/A-2  Amendment No. 2 of MFRI, Inc. and subsidiaries for the
year ended  January 31,  2004.  DELOITTE & TOUCHE LLP /s/  DELOITTE & TOUCHE LLP
Chicago, Illinois December 21, 2004

<PAGE>

                                                                      EXHIBIT 24

                                POWER OF ATTORNEY


     KNOW ALL MEN BY  THESE  PRESENTS,  that  each of the  undersigned,  being a
director  or  officer,  or both,  of MFRI,  INC.,  a Delaware  corporation  (the
"Company"), does hereby constitute and appoint DAVID UNGER, HENRY M. MAUTNER AND
MICHAEL D. BENNETT with full power to each of them to act alone, as the true and
lawful attorneys and agents of the undersigned,  with full power of substitution
and resubstitution to each of said attorneys to execute, file or deliver any and
all  instruments  and to do all acts and things which said  attorneys and agents
deem  advisable to enable the Company to comply with the Securities Act of 1933,
as amended,  and any  requirements or regulations of the Securities and Exchange
Commission in respect thereof,  in connection with the  registration  under said
Securities Act of shares of common stock of the Company subject to the Company's
2001  Independent  Directors  Stock Option  Plan,  including  specifically,  but
without  limitation  of the  general  authority  hereby  granted,  the power and
authority to sign his name as a director or officer or both, of the Company,  as
indicated below his signature, to the registration statement, and any amendment,
post-effective amendment, supplement or papers supplemental thereto, to be filed
with respect to said shares of common stock;  and each of the  undersigned  does
hereby fully ratify and confirm all that said  attorneys  and agents,  or any of
them, or the  substitute of any of them,  shall do or cause to be done by virtue
hereof.  Validity of this Power of  Attorney  will not be affected by failure to
acknowledge, witness or seal it.

     This Power of Attorney may be executed in two or more counterparts, each of
which  shall be  original  and off of which  shall  constitute  one and the same
instrument.




                         [signatures on following page]
<PAGE>

     IN WITNESS WHEREOF,  each of the undersigned has subscribed these presents,
this 17th day of November, 2004.




/s/ David Unger                     Director, Chairman of the Board of
---------------------------------   Directors, President and Chief Executive
David Unger                         Officer

                                    Director and Vice Chairman of the
Henry M. Mautner                    Board of Directors

/s/ Bradley E. Mautner              Director and Executive Vice President
---------------------------------
Bradley E. Mautner

/s/ Arnold F. Brookstone            Director
---------------------------------
Arnold F. Brookstone

/s/ Eugene Miller                   Director
---------------------------------
Eugene Miller

/s/ Stephen B. Schwartz             Director
---------------------------------
Stephen B. Schwartz

/s/ Dennis Kessler                  Director
---------------------------------
Dennis Kessler

/s/ Michael D. Bennett              Vice President, Secretary and Treasurer
---------------------------------   (Principal Financial and Accounting Officer)
Michael D. Bennett
[{"type": "S-8", "sequence": "1", "filename": "forms8122004.txt", "description": "FORM S-8", "secsgml_size_bytes": 21818}]
{"company-data": {"conformed-name": "MFRI INC", "cik": "0000914122", "assigned-sic": "3564", "irs-number": "363922969", "state-of-incorporation": "DE", "fiscal-year-end": "0131"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-121526", "film-number": "041218768"}, "business-address": {"street1": "7720 LEHIGH AVE", "city": "NILES", "state": "IL", "zip": "60714", "phone": "8479661000"}, "mail-address": {"street1": "7720 LEHIGH AVE", "city": "NILES", "state": "IL", "zip": "60714"}, "former-company": {"former-conformed-name": "MIDWESCO FILTER RESOURCES INC", "date-changed": "19970402"}}
SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      UNDER
                           THE SECURITIES ACT OF 1933

                                   MFRI, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                               36-3922969
 State or other jurisdiction of                                 (IRS Employer
 incorporation or organization)                              Identification No.)

                               7720 Lehigh Avenue
                              Niles, Illinois 60714
                    (Address, of principal executive offices)

                  2001 INDEPENDENT DIRECTORS STOCK OPTION PLAN
                            (Full title of the plan)

                                 Mr. David Unger
                       Chairman of the Board of Directors
                                   MFRI, Inc.
                               7720 Lehigh Avenue
                              Niles, Illinois 60714
                     (Name and address of agent for service)

                                  (847)966-1000
          (Telephone number, including area code, of agent for service)

                                    Copy to:

                               Hal M. Brown, Esq.
                                Piper Rudnick LLP
                            203 North LaSalle Street
                                   Suite 1900
                             Chicago, Illinois 60601
                                 (312) 368-4012
                           (312) 236-7516 (telecopier)
                         CALCULATION OF REGISTRATION FEE
================================================================================
Proposed maximum   Proposed maximum
               Title of each class of                     Amount to be       offering price        aggregate           Amount of
             securities to be registered                   registered         per share(1)     offering price(1)   registration fee
------------------------------------------------------------------------------------------------------------------------------------

Common Stock, par value
$.01 per share....................................         100,000            $9.12            $556,280              $70.48
====================================================================================================================================
(1)  Pursuant  to  Rule  457(c)  and  457(h),  the  registration  fee  has  been
     calculated  on the basis of the actual price per share  (ranging from $2.15
     to $3.12 per share) at which the  options may be  exercised  with regard to
     those options for which such  information is available,  and with regard to
     the remaining  shares,  on the basis of $9.12 per share, the average of the
     high and low sale  prices of the common  stock on  December  21,  2004,  as
     reported by the Nasdaq National Market System.
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents By Reference.

     The Company's  prospectus  dated January 21, 1994 filed with the Securities
and  Exchange  Commission  pursuant to Rule 424(b) under the  Securities  Act of
1933, as amended,  the Company's  Amended Annual Report on Form 10-K/A-2 for the
fiscal year ended January 31, 2004, the Company's  Quarterly Report on Form 10-Q
for the fiscal quarter ended April 30, 2004, and the Company's Amended Quarterly
Report  on  Form 10-Q/A   for  the  fiscal  quarter  ended  July  31,  2004  are
incorporated in this registration statement by reference.  All reports and proxy
statements filed by the Company pursuant to Sections 13(a),  13(c), 14 and 15(d)
of the Securities  Exchange Act of 1934  subsequent to the date hereof and prior
to the filing of a post-effective  amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities then remaining
unsold,  shall be deemed to be  incorporated  by reference in this  registration
statement and to be a part hereof from the date of filing of such documents.

Item 4.  Description of Securities.

         Not applicable.

Item 5.  Interests of Named Experts and Counsel.

     An opinion  with  respect  to the  legality  of the shares of common  stock
subject to stock  options is being given by Piper  Rudnick  LLP,  203 N. LaSalle
Street, Suite 1900, Chicago, Illinois, 60601, counsel for the Company.

Item 6.  Indemnification of Directors and Officers.

     Section  145  of  the   Delaware   General   Corporation   Law   authorizes
indemnification  of  directors,  officers,  employees and agents of the Company;
allows the  advancement of costs of defending  against  litigation;  and permits
companies incorporated in Delaware to purchase insurance on behalf of directors,
officers,  employees  and  agents  against  liabilities  whether  or  not in the
circumstances  such  companies  would have the power to  indemnify  against such
liabilities under the provisions of the statute.

     The Company's  Certificate  of  Incorporation  and its By-Laws  provide for
indemnification  of its officers and  directors to the full extent  permitted by
Section 145 of the Delaware General Corporation Law.

                                      II-2
The  Company's  Certificate  of  Incorporation  eliminates,  to the fullest
extent permitted by Delaware law,  liability of a director to the Company or its
stockholders for monetary damages for a breach of such director's fiduciary duty
of care except for  liability  where a director  (a) breaches his or her duty of
loyalty to the  Company or its  stockholders,  (b) fails to act in good faith or
engages in  intentional  misconduct or knowing  violation of law, (c) authorizes
payment of an illegal  dividend or a stock repurchase or (d) obtains an improper
personal  benefit.  While  liability for monetary  damages has been  eliminated,
equitable remedies such as injunctive relief or rescission remain available.  In
addition,  a director is not  relieved of his  responsibilities  under any other
law, including the federal securities laws.

     The  Company  has  entered  into  indemnification  agreements  in the  form
described  below  with each  person  who is  currently  a member of the Board of
Directors of the Company and will enter into such agreements with persons who in
the future  become  directors of the Company.  Such  indemnification  agreements
provide for indemnification  against any and all expenses incurred in connection
with, as well as any and all  judgments,  fines,  and amounts paid in settlement
resulting  from,  any  threatened,   pending,  or  completed  action,  suit,  or
proceeding,   whether  civil,   criminal,   administrative,   or   investigative
(collectively an "Action"), by reason of the fact that such director is or was a
director, officer, employee or agent of the Company, or is or was serving at the
request of the  Company as a  director,  officer,  employee  or agent of another
corporation,  partnership,  joint  venture,  trust,  or  other  enterprise.  The
indemnification   agreements   provide   that  if  any   payment,   advance   or
indemnification  of the director requires that he or she acted in good faith, in
a manner he or she  reasonably  believed  to be for or not  opposed  to the best
interests  of the  Company or  without  reasonable  cause to believe  his or her
conduct was  unlawful,  then it shall be presumed that he or she so acted unless
proven  otherwise  by  clear  and  convincing   evidence.   The  indemnification
agreements  also  provide  for  the  advancement  of  all  expenses,   including
reasonable  attorneys'  fees,  arising  from  the  investigation  of any  claim,
preparation  for  the  defense  or  defense  or  settlement  of an  Action.  The
indemnification  agreements  authorize the Company to participate in the defense
of any action and to assume  the  defense  thereof,  with  counsel  who shall be
reasonably  satisfactory  to the director,  provided that the director  shall be
entitled to  separate  counsel of his or her  choosing  if he or she  reasonably
believes that (i) there exists conflicting  interests between himself or herself
and the Company or other  parties  (the  defense of whom the Company  shall have
assumed) or (ii) there is any  substantial  likelihood  that the Company will be
financially   or  legally   unable  to  satisfy   its   obligations   under  the
Indemnification   Agreement.  The  indemnification  agreements  provide  that  a
director's   rights  under  such   contract  are  not  exclusive  of  any  other
indemnification  rights  he or she may have  under  any  provision  of law,  the
Company's  Certificate of  Incorporation  or By-laws,  the vote of the Company's
stockholders or disinterested directors, other agreements or otherwise.

Item 7.  Exemption from Registration Claimed.

         Not applicable.

                                      II-3
Item 8.  Exhibits.

         Exhibits filed with this Amendment

          4    2001   Independent   Directors  Stock  Option  Plan,  as  amended
               [Incorporated  by  reference to Exhibit  (d)(5) of Form  SC-TO-1,
               filed May 25, 2001]

          5    Opinion of Piper Rudnick LLP

          23.1 Consent of Deloitte & Touche LLP

          23.2 Consent of Piper Rudnick LLP (contained in Exhibit 5 hereof)

          24   Power of  Attorney  of  directors  and  certain  officers  of the
               Company.

Item 9.  Undertakings.

     The undersigned registrant hereby undertakes (i) to file, during any period
in which  offers or sales are being made,  a  post-effective  amendment  to this
registration  statement to include any material  information with respect to the
plan of distribution not previously  disclosed in the registration  statement or
any material change to such information in the registration statement; (ii) that
for the purpose of determining  any liability  under the Securities Act of 1933,
each such  post-effective  amendment  shall be  deemed to be a new  registration
statement relating to the securities  offered therein,  and the offering of such
securities  at that time shall be deemed to be the  initial  bona fide  offering
thereof;  and (iii) to  remove from  registration  by means of a  post-effective
amendment  any of the  securities  being  registered  which remain unsold at the
termination of the offering.

     The  undersigned   registrant  hereby  undertakes  that,  for  purposes  of
determining  any liability  under the Securities Act of 1933, each filing of the
registrant's  annual report pursuant to  section 13(a)  or  section 15(d) of the
Securities  Exchange  Act of 1934  (and,  where  applicable,  each  filing of an
employee   benefit  plan's  annual  report  pursuant  to  section 15(d)  of  the
Securities  Exchange  Act of 1934)  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time  shall be  deemed to be the  initial  bona fide  offering  thereof.

     Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors,  officers and controlling  persons of the
registrant pursuant to the foregoing  provisions,  or otherwise,  the registrant
has been advised that in the opinion of the Securities  and Exchange  Commission
such  indemnification  is against  public policy as expressed in the Act and is,
therefore,  unenforceable. In the event that a claim for indemnification against
such liabilities  (other than the payment by the registrant of expenses incurred
or paid by a director,  officer or  controlling  person of the registrant in the
successful  defense of any  action,  suit or  proceeding)  is  asserted  by such

                                      II-4
director,  officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

                                      II-5
SIGNATURES

     Pursuant to the  requirements of the Securities Act of 1933, the registrant
certifies  that it has  reasonable  grounds to believe  that it meets all of the
requirements  for  filing  on Form S-8 and has  duly  caused  this  registration
statement  to be  signed  on its  behalf  by  the  undersigned,  thereunto  duly
authorized, in the City of Niles, State of Illinois, on December 21, 2004.

                                             MFRI, INC.

                                      By:   /s/ David Unger
                                            ------------------------------------
                                            David Unger
                                            Chairman of the Board and Chief
                                            Executive Officer

     Pursuant  to  the   requirements  of  the  Securities  Act  of  1933,  this
registration  statement  has been signed below by the  following  persons in the
capacities and on the date indicated.

 Signature                          Title                           Date
---------------------------  ------------------------------- ----===-----------
 David Unger*                Director and Chairman of the
                             Board of Directors (Principal
                             Executive Officer)                       +

 Michael D. Bennett*         Vice President, Secretary and
                             Treasurer (Principal Financial
                             and Accounting Officer)

 Arnold F. Brookstone*       Director                                 +

 Dennis Kessler*             Director                                 +

 Bradley E. Mautner*         Director                                 +

 Eugene Miller*              Director                                 +

 Stephen B. Schwartz*        Director                                 +

  * By:  /s/ David Unger     Individually and as Attorney-            +
       -------------------   in-fact
       David Unger

  + December 21, 2004

                                      II-6
EXHIBIT INDEX
                                  -------------

Exhibit No.
-----------

   4.1             2001 Independent Directors Stock Option Plan, as amended
                   [Incorporated by reference to Exhibit (d)(5) of Form
                   SC-TO-1, filed May 25, 2001]

   5               Opinion of Piper Rudnick LLP

   23.1            Consent of Deloitte & Touche LLP

   23.2            Consent of Piper Rudnick LLP (contained in Exhibit 5 hereof)

   24              Power of Attorney of directors and certain officers of the
                   Company
EXHIBIT 5

                        [LETTERHEAD OF PIPER RUDNICK LLP]

                                December 21, 2004

The Board of Directors
MFRI, Inc.
7720 Lehigh Avenue
Niles, Illinois 60714

Gentlemen:

     We have examined the registration statement to be filed with the Securities
and Exchange Commission on or about December 21, 2004 for registration under the
Securities Act of 1933, as amended, of 100,000 shares of common stock, par value
$0.01 per share ("Common  Stock"),  of MFRI, Inc. (the  "Company")  reserved for
issuance upon the exercise of options granted and to be granted  pursuant to the
Company's 2001  Independent  Directors  Stock Option Plan (the "2001 Plan").  We
have  examined  pertinent  corporate  documents  and  records  of  the  Company,
including its  Certificate of  Incorporation  and its By-Laws,  and we have made
such other  examinations  as we have deemed  necessary or appropriate as a basis
for the opinion hereinafter expressed.

     On the basis of the  foregoing,  we are of the opinion that the issuance of
the  aforesaid  shares of common stock to be offered by the Company  pursuant to
options  granted  or to be  granted  pursuant  to the 2001  Plan  has been  duly
authorized, and, when issued and sold upon the terms and conditions set forth in
the 2001 Plan and in the  options  granted  or to be  granted  thereunder,  such
shares will be legally issued, fully paid and non-assessable.

     We hereby  consent  to the  filing of this  opinion  as an  exhibit  to the
registration.

                                                  Very truly yours,

                                                  PIPER RUDNICK LLP

                                                  By: /s/ Hal M. Brown
                                                     --------------------------
                                                      Hal M. Brown, a partner
EXHIBIT 23.1

            CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in this  Registration  Statement of
MFRI, Inc. on Form S-8 of our report dated May 12, 2004 (December 14, 2004 as to
Note 17),  relating to the consolidated  financial  statements of MFRI, Inc. and
subsidiaries  as of and for the  year  ended  January  31,  2004  (which  report
expresses an unqualified opinion and includes explanatory  paragraphs as to MFRI
Inc. s change in its method of accounting for goodwill and intangible assets and
restatement  of its balance sheet  discussed in Note 17) appearing in the Annual
Report on  Form 10-K/A-2  Amendment No. 2 of MFRI, Inc. and subsidiaries for the
year ended  January 31,  2004.  DELOITTE & TOUCHE LLP /s/  DELOITTE & TOUCHE LLP
Chicago, Illinois December 21, 2004
EXHIBIT 24

                                POWER OF ATTORNEY

     KNOW ALL MEN BY  THESE  PRESENTS,  that  each of the  undersigned,  being a
director  or  officer,  or both,  of MFRI,  INC.,  a Delaware  corporation  (the
"Company"), does hereby constitute and appoint DAVID UNGER, HENRY M. MAUTNER AND
MICHAEL D. BENNETT with full power to each of them to act alone, as the true and
lawful attorneys and agents of the undersigned,  with full power of substitution
and resubstitution to each of said attorneys to execute, file or deliver any and
all  instruments  and to do all acts and things which said  attorneys and agents
deem  advisable to enable the Company to comply with the Securities Act of 1933,
as amended,  and any  requirements or regulations of the Securities and Exchange
Commission in respect thereof,  in connection with the  registration  under said
Securities Act of shares of common stock of the Company subject to the Company's
2001  Independent  Directors  Stock Option  Plan,  including  specifically,  but
without  limitation  of the  general  authority  hereby  granted,  the power and
authority to sign his name as a director or officer or both, of the Company,  as
indicated below his signature, to the registration statement, and any amendment,
post-effective amendment, supplement or papers supplemental thereto, to be filed
with respect to said shares of common stock;  and each of the  undersigned  does
hereby fully ratify and confirm all that said  attorneys  and agents,  or any of
them, or the  substitute of any of them,  shall do or cause to be done by virtue
hereof.  Validity of this Power of  Attorney  will not be affected by failure to
acknowledge, witness or seal it.

     This Power of Attorney may be executed in two or more counterparts, each of
which  shall be  original  and off of which  shall  constitute  one and the same
instrument.

                         [signatures on following page]
IN WITNESS WHEREOF,  each of the undersigned has subscribed these presents,
this 17th day of November, 2004.

/s/ David Unger                     Director, Chairman of the Board of
---------------------------------   Directors, President and Chief Executive
David Unger                         Officer

                                    Director and Vice Chairman of the
Henry M. Mautner                    Board of Directors

/s/ Bradley E. Mautner              Director and Executive Vice President
---------------------------------
Bradley E. Mautner

/s/ Arnold F. Brookstone            Director
---------------------------------
Arnold F. Brookstone

/s/ Eugene Miller                   Director
---------------------------------
Eugene Miller

/s/ Stephen B. Schwartz             Director
---------------------------------
Stephen B. Schwartz

/s/ Dennis Kessler                  Director
---------------------------------
Dennis Kessler

/s/ Michael D. Bennett              Vice President, Secretary and Treasurer
---------------------------------   (Principal Financial and Accounting Officer)
Michael D. Bennett