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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>0001181431-06-069450.txt : 20061213
<SEC-HEADER>0001181431-06-069450.hdr.sgml : 20061213
<ACCEPTANCE-DATETIME>20061213171038
ACCESSION NUMBER:		0001181431-06-069450
CONFORMED SUBMISSION TYPE:	4
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20061212
FILED AS OF DATE:		20061213
DATE AS OF CHANGE:		20061213

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:			0630

	BUSINESS ADDRESS:	
		STREET 1:		28 EXECUTIVE PARK
		STREET 2:		SUITE 200
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92614
		BUSINESS PHONE:		9492601600

	MAIL ADDRESS:	
		STREET 1:		28 EXECUTIVE PARK
		STREET 2:		SUITE 200
		CITY:			IRVINE
		STATE:			CA
		ZIP:			92614

REPORTING-OWNER:	

	OWNER DATA:	
		COMPANY CONFORMED NAME:			Palmer Greg D
		CENTRAL INDEX KEY:			0001375782

	FILING VALUES:
		FORM TYPE:		4
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-21203
		FILM NUMBER:		061274837

	BUSINESS ADDRESS:	
		BUSINESS PHONE:		(949) 360-1316

	MAIL ADDRESS:	
		STREET 1:		26481 BROKEN BIT LANE
		CITY:			LAGUNA HILLS
		STATE:			CA
		ZIP:			92653
</SEC-HEADER>
<DOCUMENT>
<TYPE>4
<SEQUENCE>1
<FILENAME>rrd138565.xml
<DESCRIPTION>STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0202</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2006-12-12</periodOfReport>

    <notSubjectToSection16>0</notSubjectToSection16>

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

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001375782</rptOwnerCik>
            <rptOwnerName>Palmer Greg D</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>26481 BROKEN BIT LANE</rptOwnerStreet1>
            <rptOwnerStreet2></rptOwnerStreet2>
            <rptOwnerCity>LAGUNA HILLS</rptOwnerCity>
            <rptOwnerState>CA</rptOwnerState>
            <rptOwnerZipCode>92653</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>0</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
        </reportingOwnerRelationship>
    </reportingOwner>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Employee Stock Option (right to buy)</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>3.575</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2006-12-12</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>A</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>15000</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>0</value>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>A</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <exerciseDate>
                <footnoteId id="F1"/>
            </exerciseDate>
            <expirationDate>
                <value>2016-12-12</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>15000</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>30000</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">The options vest and become exercisable on the earlier of (i) the first anniversary of the grant date and (ii) immediately prior to the annual meeting of stockholders following the grant date.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ Greg D. Palmer</signatureName>
        <signatureDate>2006-12-13</signatureDate>
    </ownerSignature>
</ownershipDocument>
</XML>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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