The blue-ringed octopus (Hapalochlaena lunulata), one of the world's most venomous animals, has long captivated and endangered a large audience: children playing at the beach, divers turning over rocks, and biologists researching neurotoxins. These small animals spend much of their time in hiding, showing effective camouflage patterns. When disturbed, the octopus will flash around 60 iridescent blue rings and, when strongly harassed, bite and deliver a neurotoxin that can kill a human. Here, we describe the flashing mechanism and optical properties of these rings. The rings contain physiologically inert multilayer reflectors, arranged to reflect blue-green light in a broad viewing direction. Dark pigmented chromatophores are found beneath and around each ring to enhance contrast. No chromatophores are above the ring; this is unusual for cephalopods, which typically use chromatophores to cover or spectrally modify iridescence. The fast flashes are achieved using muscles under direct neural control. The ring is hidden by contraction of muscles above the iridophores; relaxation of these muscles and contraction of muscles outside the ring expose the iridescence. This mechanism of producing iridescent signals has not previously been reported in cephalopods and we suggest that it is an exceptionally effective way to create a fast and conspicuous warning display.