Bluefly, Inc (NASDAQ SmallCap: BFLY), a leading Internet retailer of designer fashions at outlet store prices www.bluefly.com , announced today that it has expanded its online marketing relationship with MSN.com by becoming a featured tenant in MSN's redesigned eShop channel. Under the terms of the deal, Bluefly will receive fixed links in the Clothing & Accessories Department of MSN's eShop, in addition to greater exposure across the Microsoft Network of sites through integrated product and graphical placements.

"Successful online retailers need to do many things, but at a minimum they need to acquire customers in a cost-effective manner," said Jonathan Morris, executive vice president of Bluefly, Inc. "Over the last year, MSN's eShop has proven itself to be a very effective customer acquisition vehicle for Bluefly. We are extremely pleased to renew our relationship with MSN, and look forward to working with them as we try to grow Bluefly's customer base," Morris added.

In an effort to acquire customers efficiently, Bluefly has adopted a strategy of evaluating its online marketing deals on a strict return on investment basis. It has tested a variety of marketing initiatives, expanding programs that it believes have been successful and terminating those that have not met its rigorous standards. Bluefly and MSN have renewed their relationship because it has been successful across multiple criteria. It has been both a cost-effective customer acquisition tool for Bluefly, as well as a valuable offering for MSN customers.

"MSN is committed to working with established online merchants who offer significant value to our audience," said Jed Savage, national sales manager for MSN. "Bluefly is an online leader in the off-price apparel category and an innovator in their use of content and creative merchandising to sell apparel on the web. Bluefly's presence in the Clothing & Accessories department of eShop is a key component of our consumer offering," Savage added.

Bluefly is a NASDAQ SmallCap public company headquartered in New York City, in the heart of the fashion district. Distinguishing itself with discounts of up to 75%, products from more than 300 designers and a 90-day money back guarantee, Bluefly.com aims to be the world's first full service outlet store for designer fashions. Its innovative MyCatalog feature is designed to eliminate the "hit-or-miss" aspect of off-price shopping by allowing shoppers to see only those products that are available for sale and match their interests. The online merchant has established strategic alliances with many of the most visited Web Sites and portals including AOL, Excite, Lycos, MSN, Netcenter, Tripod, Women.com and Yahoo! For more information, visit www.bluefly.com.

This press release may include statements that constitute "forward-looking" statements, usually containing the words "believe", "project", "expect", or similar expressions. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. The risks and uncertainties are detailed from time to time in reports filed by the company with the Securities and Exchange Commission, including Forms 8-A, 8-K, 10-QSB, and 10-KSB. These risks and uncertainties include, but are not limited to, the following: the Company's limited working capital, need for additional capital and potential inability to raise such capital; the competitive nature of the business and the potential for competitors with greater resources to enter such business; risks of litigation for sale of unauthentic or damaged goods and litigation risks related to sales in foreign countries; consumer acceptance of the Internet as a medium for purchasing apparel; recent losses and anticipated future losses; the startup nature of the Internet business; the capital intensive nature of such business (taking into account the need for advertising to promote such business); the dependence on third parties and certain relationships for certain services; the successful hiring and retaining of personnel; the dependence on continued growth of online commerce; rapid technological change; online commerce security risks; governmental regulation and legal uncertainties; management of potential growth; and unexpected changes in fashion trends.