In butterflies, iridescence is caused by multiple slit interference. Sunlight contains a full range of light wavelengths. "Interference" occurs when light hitting the wing combines with light reflected off the wing. Light is a wave. If the crests and the troughs of the waves are aligned, or "in phase", they will cause constructive interference and iridescence. This happens when the one light wave hits the first groove, and a second light wave travels half of a wavelength to an other groove and is reflected back in phase with the first. If the crest of one wave meets the trough of an other wave ("out of phase"), they will cancel each other out, demising the overall light intensity.
Blue light has a wavelength range from 400-480 nm, and is the only wavelength that is interfered with constructively by the slits of the morpho, which are 200 nm apart. The slits are attached to a base of melanin, a material that absorbs other light, further strengthening the blue image.