<SUBMISSION>
<ACCESSION-NUMBER>0000950134-07-006379
<TYPE>8-K
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20070316
<ITEMS>5.02
<FILING-DATE>20070322
<DATE-OF-FILING-DATE-CHANGE>20070322
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BLUE NILE INC
<CIK>0001091171
<ASSIGNED-SIC>5944
<IRS-NUMBER>911963165
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>8-K
<ACT>34
<FILE-NUMBER>000-50763
<FILM-NUMBER>07712062
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>705 FIFTH AVE S
<STREET2>STE 900
<CITY>SEATTLE
<STATE>WA
<ZIP>98104
<PHONE>2063366700
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>705 FIFTH AVE S
<STREET2>STE 900
<CITY>SEATTLE
<STATE>WA
<ZIP>98104
</MAIL-ADDRESS>
<FORMER-COMPANY>
<FORMER-CONFORMED-NAME>INTERNET DIAMONDS INC
<DATE-CHANGED>20000131
</FORMER-COMPANY>
</FILER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>v28571e8vk.htm
<DESCRIPTION>FORM 8-K
<TEXT>
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<H5 align="left" style="page-break-before:always"><A HREF="#toc">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif"></DIV>


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>CURRENT REPORT<BR>
PURSUANT TO SECTION 13 OR 15(D) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934</B></DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 10pt"><B>March&nbsp;16, 2007</B>

<DIV align="center" style="font-size: 10pt; margin-bottom: 18pt"><B>DATE
OF REPORT (DATE OF EARLIEST EVENT REPORTED)</B>
</DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>BLUE NILE, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)</DIV>


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    <TD align="center" valign="top">DELAWARE
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">000-50763
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">91-1963165</TD>
</TR>
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    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(STATE OR OTHER JURISDICTION
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(COMMISSION FILE
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. EMPLOYER</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">OF INCORPORATION)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">NUMBER)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">IDENTIFICATION NO.)</TD>
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</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">705 FIFTH AVENUE SOUTH, SUITE 900, SEATTLE, WASHINGTON, 98104<BR>
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">(206)&nbsp;336-6700<BR>
REGISTRANT&#146;S TELEPHONE NUMBER, INCLUDING AREA CODE</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt">N/A<BR>
(FORMER NAME OR FORMER ADDRESS IF CHANGED SINCE LAST REPORT)</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under
the Exchange Act (17 CFR 240.14d-2(b))
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under
the Exchange Act (17 CFR 240.13e-4(c))
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





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<TR><TD></TD><TD colspan="8"><A HREF="#000">ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS</A></TD></TR>
<TR><TD colspan="9"><A HREF="#001">SIGNATURE</A></TD></TR>
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<DIV align="left"><A NAME="000"></A></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF
CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Executive Officer Cash Incentive Plan</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On
March&nbsp;16, 2007, the Compensation Committee of the Board of
Directors of Blue Nile, Inc. (the &#147;Company&#148;) approved a 2007 cash incentive plan designed to motivate
its executive officers to achieve the Company&#146;s financial and other performance objectives and to
reward them for their achievement when those objectives are met (the &#147;Plan&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ELIGIBILITY. All executive officers, including the chief executive officer, are eligible for
participation in the Plan. The Company may also pay discretionary bonuses or other types of
compensation outside the Plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ADMINISTRATION. The Plan is administered by the Compensation Committee. The Compensation Committee
has the authority and discretion to approve and review the Plan and its operation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">DETERMINATION
OF BONUS AMOUNTS. The aggregate bonus pool for fiscal year 2007 is established through the
achievement of the Company&#146;s objectives for Adjusted EBITDA
(defined as net income before income taxes, other income, net, depreciation, amortization and stock-based compensation). The Compensation Committee also
established a target bonus amount for each executive officer
expressed as a percentage of the executive officer&#146;s
base salary. The Compensation Committee may award the executive officer between 0% and 200% of
such officer&#146;s bonus target amount based: (i)&nbsp;fifty percent on the achievement of financial
performance objectives, including revenue growth, earnings per share and free cash flow generation,
and (ii)&nbsp;fifty percent on the achievement of individual performance objectives based on the
executive officer&#146;s roles and responsibilities within the Company. If the achievement of the
financial and individual objectives results in an aggregate bonus award amount that is different
from the aggregate bonus amount established by reviewing performance against the Adjusted EBITDA
target, the Compensation Committee has the authority to award each of the executive officers the bonus
amount it deems consistent with its review of the executive officer&#146;s performance against the
pre-established EBITDA target and the pre-established financial and personal objectives.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">DISTRIBUTION. The bonus payments will be distributed to executive officers in a single lump sum
amount following the completion of the Company&#146;s fiscal year 2007.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">TARGET
AMOUNTS FOR NAMED EXECUTIVE OFFICERS. The aggregate target bonus
pool established for the named executive officers, including
the chief executive officer, for fiscal year 2007 is $675,000. The
individual
bonus target amounts for the named executive officers range
from 29% to 75% of base salary.
</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<DIV align="left"><A NAME="001"></A></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
</DIV>

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<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">BLUE NILE, INC.<BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD valign="top">By:&nbsp;&nbsp;</TD>
    <TD colspan="2" style="border-bottom: 1px solid #000000" align="left">/s/ Diane M. Irvine
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">Diane M. Irvine&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="2" align="left">President and Chief Financial Officer<BR>
(Principal Accounting and Financial<BR>
Officer)&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>
    <TD colspan="5">&nbsp;</TD>
</TR>
</TABLE>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Dated: March&nbsp;22, 2007
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>


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</SUBMISSION>
