The Wittelsbach diamond, that is almost an inch across, was given to Infanta Margarita Teresa by her father King Philip IV of Spain on her engagement to her uncle Leopold I of Austria.
The 35.56 carat gem could fetch as much as £10 million when it goes on sale in London on December 10, experts said.
Should it fall short of that amount, one of the world's most beautiful coloured diamonds – with a 300-year-old royal history charting the flow of power across Europe – will have sold for less than a big fish in formaldehyde.
In September Damien Hirst's tiger shark in a tank, called The Kingdom, sold for £9,561,250 at Sotheby's.
The infanta, a beautiful child with blue eyes and blonde hair, was the central figure in Las Meninas (1656), the most famous painting by Spaniard Diego Velázquez.
It depicts the girl, her maids of honour and members of her family and even the artist himself curiously looking out of the painting as if on the viewers themselves.
Upon her politically-motivated engagement to Leopold I, who later became the Holy Roman Emperor, her father gave his 13-year-old daughter the diamond as part of the dowry.
Sadly she died aged only 21, having given birth to four children, of which only one survived beyond childhood.
The diamond, reputed to have originated from the Indian diamond mines, passed into the Austrian and then Bavarian crown jewels, before being sold into private hands in 1931.
It has been in the current private collection since 1964.
A Christie's spokesman said "no examples" of coloured diamonds comparable to the Wittelsbach had been ever been offered at auction before.
She said: "Blue diamonds are rare and to offer a blue diamond of this size, quality, shape and provenance is truly extraordinary."
The nearest comparable coloured diamond sold at Christie's was one just a third of the size, a 13.39 carat intense blue diamond that fetched $8.9 million (£5.5 million) in May.
François Curiel, chairman of Christie's Europe and its international head of jewellery, said: "It is a great honour and a lifetime dream to handle a museum quality stone such as the Wittelsbach.
"The appearance of a large blue diamond, among the rarest of colours, with a history that can be traced back to the 17th century and 300 years of royal connections will surely be a thrilling occasion for all collectors of exceedingly rare jewels and works of art."
The Wittelsbach diamond is the star lot in Christie's auction Jewels: The London Sale, on December 10.
It is on public display at the auction house in King Street, St James's, London, from today, December 7 (Sunday) to Tuesday December 9th.