Exhibit 5


                        [PEPPER HAMILTON LLP LETTERHEAD]

                                 October 6, 1999

Bluestone Software, Inc.
1000 Briggs Road
Mount Laurel, New Jersey 08054

                     Re: Registration Statement on Form S-8
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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 (i) the offer and
sale of up to 3,290,328 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 1996 Incentive and
Non-Qualified Stock Option Plan as amended and restated (the "Plan") and (ii)
the offer and sale of up to 11,400 shares of Common Stock issued by the
Company as a result of the exercise by certain optionees of options awarded
under the Plan (collectively, the "Shares").

                  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 of the Company issued as a result of the exercise of options
granted under the Plan are, and 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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