This paper reviews the concept of blue economy, how it relates to Zanzibar and how to take advantage of the development opportunities it provides. In particular, the paper identifies the strengths of the blue economy and the opportunities available, and how these may be utilized to address development challenges and maximize societal benefits. The paper recognizes that implementation of the blue economy concept in Zanzibar is in its early stages. Therefore, it focuses on issues relating to formulation of a blue economy strategy in Zanzibar. The paper aims to stimulate constructive discussion to enrich and complement the efforts of the RGZ to develop this vitally important strategy. The paper is structured as follows. Section 2 briefly presents the concept of the blue economy while Section 3 discusses reasons why the blue economy is relevant for coastal countries generally and for Zanzibar specifically. The status of the blue economy in Zanzibar is presented in Section 4, followed by discussion of the key steps needed to develop a strategy to realize a sustainable and competitive blue economy in Section 5. Section 6 highlights the necessity for making strategic choices to advance the blue economy and Section 7 discusses institutional challenges. Section 8 concludes the paper.