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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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MIC-Info: RSA-MD5,RSA,
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<SEC-DOCUMENT>0001179110-04-006798.txt : 20040326
<SEC-HEADER>0001179110-04-006798.hdr.sgml : 20040326
<ACCEPTANCE-DATETIME>20040326180212
ACCESSION NUMBER:		0001179110-04-006798
CONFORMED SUBMISSION TYPE:	4
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20040326
FILED AS OF DATE:		20040326

REPORTING-OWNER:	

	OWNER DATA:	
		COMPANY CONFORMED NAME:			LYNCH MARTIN
		CENTRAL INDEX KEY:			0001272541

	FILING VALUES:
		FORM TYPE:		4
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-21203
		FILM NUMBER:		04694209

	BUSINESS ADDRESS:	
		STREET 1:		28 EXECUTIVE PARK
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92614

ISSUER:		

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DIEDRICH COFFEE INC
		CENTRAL INDEX KEY:			0000947661
		STANDARD INDUSTRIAL CLASSIFICATION:	RETAIL-FOOD STORES [5400]
		IRS NUMBER:				330086628
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			0127

	BUSINESS ADDRESS:	
		STREET 1:		2144 MICHELSON DRIVE
		STREET 2:		STE A
		CITY:			IRVINE
		STATE:			CA
		ZIP:			9262682612
		BUSINESS PHONE:		9492601600

	MAIL ADDRESS:	
		STREET 1:		2144 MICHELSON DRIVE
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92612
</SEC-HEADER>
<DOCUMENT>
<TYPE>4
<SEQUENCE>1
<FILENAME>edgar.xml
<DESCRIPTION>FORM 4 -
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0201</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2004-03-26</periodOfReport>

    <notSubjectToSection16>0</notSubjectToSection16>

    <issuer>
        <issuerCik>0000947661</issuerCik>
        <issuerName>DIEDRICH COFFEE INC</issuerName>
        <issuerTradingSymbol>DDRX</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001272541</rptOwnerCik>
            <rptOwnerName>LYNCH MARTIN</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>28 EXECUTIVE PARK</rptOwnerStreet1>
            <rptOwnerStreet2>SUITE 200</rptOwnerStreet2>
            <rptOwnerCity>IRVINE</rptOwnerCity>
            <rptOwnerState>CA</rptOwnerState>
            <rptOwnerZipCode>92614</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>0</isDirector>
            <isOfficer>1</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle>CFO</officerTitle>
            <otherText></otherText>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable></nonDerivativeTable>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Employee Stock Option (right to buy)</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>3.38</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2004-03-26</value>
                <footnoteId id="F1"/>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>150000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>3.38</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F2"/>
            </exerciseDate>
            <expirationDate>
                <value>2013-10-01</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>150000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>150000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">The option grant was approved by Diedrich Coffee, Inc.'s board of directors on October 1, 2003, subject to shareholder approval of an amendment to the stock option plan under which the options were granted and subject to the execution of a definitive employment agreement. The conditions to grant were satisfied on March 26, 2004.</footnote>
        <footnote id="F2">The options will become exercisable in four equal installments on each of April 1, 2004, October 1, 2004, April 1, 2005, and October 1, 2005.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ Martin Lynch</signatureName>
        <signatureDate>2004-03-26</signatureDate>
    </ownerSignature>
</ownershipDocument>

</XML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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