Why are the Na'vi in Avatar blue in color?

According to a 2009 interview, James Cameron explains:

“We wanted to say that there was an otherness, an alien-ness to them. But we wanted to keep them human enough that we could understand their emotions. So, they were going to have two eyes, and they were going to have a mouth.” Cameron made a point to say that he took particular pride in creating the wholly original world of “Avatar” at a time when so much of Hollywood is spinning their wheels with sequels, remakes and adaptations of old material. And, like his best films, he made sure that a romantic subplot was in the mix — which placed added requirements on the Na’vi character Neytiri, played by Zoe Saldana.

“At a certain point, we realized this is going to be a love story,” he explained of Neytiri’s relationship with Jake Sully, a human-in-Na’vi-form portrayed by Sam Worthington. “So, Zoe’s character had to be beautiful and accessible and relatable emotionally.”

Looking over at his fellow Q&A participants — the Dominican/ Puerto Rican Saldana and Western Australian Worthington — the Canadian-born Cameron said that the Na’vi’s blue skin also allowed him to comment on race. “[I was thinking], ’What are the differences that we can deal with, without it becoming a barrier?’ Skin color is great, and it’s also great thematically, because skin color is obviously such a big issue on our planet,” he explained with a grin, looking at his actors and teasing Worthington. “All the warm tones — from pallid Canadian pink, to beautiful warm browns and, well, pallid Australian pink — were all taken.

“So, we were down to blue and green basically — and green had been taken by all those Martian movies with the little green men,” he remembered of his reasoning. “So, we have big blue women, not little green men.”

The gist is:

James wanted to be different (not green martians nor human like skin color & tone) without being a radical as the purpose wasn't to desensitize us from the Na'vi people. He wanted to be able to raise an issue / difference that is a president factor with the audience i.e. Skin color and race. Something that can be visually referenced and different whilst having human like characteristics.

As he said in an interview:

Cameron said that the Na’vi’s blue skin also allowed him to comment on race. “[I was thinking], ’What are the differences that we can deal with, without it becoming a barrier?’ Skin color is great, and it’s also great thematically, because skin color is obviously such a big issue on our planet,” he explained with a grin, looking at his actors and teasing Worthington. “All the warm tones — from pallid Canadian pink, to beautiful warm browns and, well, pallid Australian pink — were all taken.

“So, we were down to blue and green basically — and green had been taken by all those Martian movies with the little green men,” he remembered of his reasoning. “So, we have big blue women, not little green men.”