The 57-year-old American billionaire is flying on a planned 11-minute voyage to the edge of space, nine days after Briton Richard Branson was aboard his competing space tourism company Virgin Galactic's successful inaugural suborbital flight from New Mexico.
"They are in for the flight of a lifetime," launch presenter Ariane Cornell of Blue Origin said on a live webcast.
Branson got to space first, but Bezos is due to fly higher-100 km for Blue Origin compared to 86 km for Virgin Galactic.
Bezos, founder of ecommerce company Amazon.com Inc, and his brother Mark Bezos were joined by two others. Pioneering female aviator Wally Funk and recent high school graduate Oliver Daemen are becoming the oldest and youngest people to reach space.
The flight coincides with the anniversary of Americans Neil Armstrong and Edwin "Buzz" Aldrin becoming the first humans to walk on the moon, on 20 July, 1969.
New Shepard is named for Alan Shepard, who in 1961 became the first American in space.
Funk was one of the so-called Mercury 13 group of women who trained to become NASA astronauts in the early 1960s but was passed over because of her gender.
Daemen, Blue Origin's first paying customer, is set to study physics and innovation management in the Netherlands. His father, who heads investment management firm Somerset Capital Partners, was on site to watch his son fly to space.
The launch was being witnessed by members of the Bezos family and Blue Origin employees, and a few spectators gathered along the highway before dawn.