Ownership Submission
FORM 3
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

INITIAL STATEMENT OF BENEFICIAL OWNERSHIP OF SECURITIES

Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940
OMB APPROVAL
OMB Number: 3235-0104
Expires: January 31, 2005
Estimated average burden hours per response... 0.5

(Print or Type Responses)
1. Name and Address of Reporting Person *
  GASTON DWIGHT
2. Date of Event Requiring Statement (Month/Day/Year)
09/01/2005
3. Issuer Name and Ticker or Trading Symbol
BLUE NILE INC [NILE]
(Last)
(First)
(Middle)
C/O BLUE NILE, INC., 705 FIFTH AVENUE S, STE 900
4. Relationship of Reporting Person(s) to Issuer
(Check all applicable)
_____ Director _____ 10% Owner
__X__ Officer (give title below) _____ Other (specify below)
Senior VP
5. If Amendment, Date Original Filed(Month/Day/Year)
(Street)

SEATTLE, WA 98104
6. Individual or Joint/Group Filing(Check Applicable Line)
_X_ Form filed by One Reporting Person
___ Form filed by More than One Reporting Person
(City)
(State)
(Zip)
Table I - Non-Derivative Securities Beneficially Owned
1.Title of Security
(Instr. 4)
2. Amount of Securities Beneficially Owned
(Instr. 4)
3. Ownership Form: Direct (D) or Indirect (I)
(Instr. 5)
4. Nature of Indirect Beneficial Ownership
(Instr. 5)
Common Stock 22,800
D
 
Common Stock 2,691
I
By Wife

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly. SEC 1473 (7-02)
Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

Table II - Derivative Securities Beneficially Owned (e.g., puts, calls, warrants, options, convertible securities)
1. Title of Derivative Security
(Instr. 4)
2. Date Exercisable and Expiration Date
(Month/Day/Year)
3. Title and Amount of Securities Underlying Derivative Security
(Instr. 4)
4. Conversion or Exercise Price of Derivative Security 5. Ownership Form of Derivative Security: Direct (D) or Indirect (I)
(Instr. 5)
6. Nature of Indirect Beneficial Ownership
(Instr. 5)
Date Exercisable Expiration Date Title Amount or Number of Shares
Option (right to buy) 07/15/2001(1) 02/24/2012 Common Stock 1,600 $ 0.25 D  
Option (right to buy) 02/21/2006(2) 07/26/2014 Common Stock 18,000 $ 30 D  
Option (right to buy) 05/17/2000(3) 06/25/2009 Common Stock 22,500 $ 0.5 D  
Option (right to buy) 08/26/2002(4) 02/24/2012 Common Stock 9,600 $ 0.25 D  
Option (right to buy) 08/26/2003(5) 10/14/2012 Common Stock 4,800 $ 0.25 D  
Option (right to buy) 08/26/2004(6) 10/08/2013 Common Stock 27,200 $ 8.75 D  

Reporting Owners

Reporting Owner Name / Address Relationships
Director 10% Owner Officer Other
GASTON DWIGHT
C/O BLUE NILE, INC.
705 FIFTH AVENUE S, STE 900
SEATTLE, WA 98104
      Senior VP  

Signatures

/s/ Dwight Gaston 09/09/2005
**Signature of Reporting Person Date

Explanation of Responses:

* If the form is filed by more than one reporting person, see Instruction 5(b)(v).
** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1) 25% of the option shares vest one year after July 15, 2000 and one-forty-eighth of the option shares vest in equal monthly installments over the following thirty-six months.
(2) 25% of the option shares vest one year after February 21, 2005 and one-forty-eighth of the option shares vest in equal monthly installments over the following thirty-six months.
(3) 25% of the option shares vest one year after May 17, 1999 and one-forty-eighth of the option shares vest in equal monthly installments over the following thirty-six months.
(4) 25% of the option shares vest one year after August 26, 2001 and one-forty-eighth of the option shares vest in equal monthly installments over the following thirty-six months.
(5) 25% of the option shares vest one year after August 26, 2002 and one-forty-eighth of the option shares vest in equal monthly installments over the following thirty-six months.
(6) 25% of the option shares vest one year after August 26, 2003 and one-forty-eighth of the option shares vest in equal monthly installments over the following thirty-six months.

Note: File three copies of this Form, one of which must be manually signed. If space is insufficient, See Instruction 6 for procedure.

Potential persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB number.