Apple has released a significant update for the fourth-generation iPod nano, in the form of new v1.0.3 software. The firmware should allow use of Apple's special in-ear headphones, which feature a remote and mic and should allow some form of audio recording. Apple has also introduced the ability to disable Cover Flow when rotating a player, and turn on Cover Flow manually through the Music menu.

Troubleshooting measures have addressed instability when using the Nike+iPod kit, and an issue with Genius playlists, in which hitting play with a selected song would not acknowledge the Songs shuffle setting. Apple has also addressed two video output-related problems: one in which Cover Flow art would distort in a TV slideshow, and another in which photos would become distorted after waking a Nano from sleep. The v1.0.3 update is a 57.8MB download through iTunes.