The space company, owned by Amazon.com billionaire Jeff Bezos, recovered the rocket and released a video to celebrate their triumph.
In the video, the rocket can be seen flying across the sky and releasing the New Shepard capsule.
After climbing to 330,000 feet, the capsule then gracefully falls back to earth as its engine fires slow it down.
It then settles on the landing pad about 1.5 metres from the centre.
The capsule is designed to eventually take up to six people to about 100 kilometres in a sub-orbital thrill ride.
If you can imagine taking a trip for a holiday, and then by the time you get there you just dump it in the ocean and you have to buy a whole other car to come back - that's kind of what we're doing now with rockets.
Astrojournalist Tariq Malik
Passengers will float weightless for four minutes with access to views of earth from new heights.
In a press release on the launch, Blue Origin said it was jubilant with its success.
Astrojournalist and Space.com's managing editor Tariq Malik told AM Jeff Bezos said it was the best day of his entire life.
"It's the first time that a private company has successfully [landed a space vehicle], although several have been trying this kind of approach to reusable rockets", Mr Malik said.
"If you can imagine taking a trip for a holiday, and then by the time you get there you just dump it in the ocean and you have to buy a whole other car to come back — that's kind of what we're doing now with rockets".
Jeff Bezos said the New Shepard capsule was fully reusable, which will dramatically reduce the cost of launches and commercial space flight.
Several companies are developing reusable rocket systems, including dotcom billionaire Elon Musk's company, SpaceX.
The company was almost the first to develop a viable rocket system, coming close to successfully landing their Falcon 9 rocket but all attempts so far have ended in failure.
"You can assume it might be a disappointment for SpaceX. They had hoped to be first," Mr Malik said.
Mr Musk congratulated Blue Origin, but pointed out that getting to space orbit rather than 100 kilometres in height needs about 100 times more energy.