Exhibit 5

                         Opinion of Pepper Hamilton LLP

                                 March 22, 2000

Bluestone Software, Inc.
300 Stevens Drive
Philadelphia, Pennsylvania 19113

         Re:  Registration Statement on Form S-8

Dear Sir/Madam:

              We have acted as counsel to Bluestone Software, Inc., a Delaware
corporation (the "Company"), in connection with a Registration Statement on Form
S-8 filed with the Securities and Exchange Commission on the date hereof (the
"Registration Statement"), relating to the offer and sale of up to 156,250
shares of common stock, $.001 par value per share, of the Company (the "Common
Stock"), issuable by the Company pursuant to awards granted or available for
grant under the Company's Directors' Compensation Plan (the "Plan").

              In rendering this opinion, we have examined the Registration
Statement, including the exhibits thereto, the Company's Amended and Restated
Articles of Incorporation and By-Laws as currently in effect, the Plan and such
other documents as we have deemed appropriate. We have not performed any
independent investigation other than the document examination described above.
In the foregoing examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
authenticity of all documents submitted to us as copies of originals.

              Based on the foregoing, we are of the opinion that the shares of
Common Stock issuable pursuant to awards granted or available for grant under
the Plan will be, when issued and paid for in accordance with the terms of the
Plan and any underlying option award agreements or letters, validly issued,
fully paid and non-assessable.

              The opinion set forth above is limited to the General Corporation
Law of the State of Delaware, as amended.

              We hereby consent to the filing of this opinion as Exhibit 5 to
the Registration Statement.

              The opinion expressed herein is solely for your benefit and may be
relied upon only by you.


                                  Very truly yours,

                                  /s/ Pepper Hamilton LLP
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