The singer made these comments in a piece that he wrote for the Metro Newspaper's Rush Hour Crush column, where he revealed that the song was inspired by his ex girlfriend.
The song itself focuses on a man who is coming to terms with the fact that his love for another woman will never be reciprocated.
"'I do believe in love at first sight, definitely", Blunt wrote. "I think we've all experienced that moment where we just pass by someone and catch their eye and wonder what might have been".
"And, yeah, first impressions are everything. I can feel someone's spirit and soul when I first meet them", he added. "People do have an energy, and you can sense someone who's aggressive, or someone who's kind, or someone who's gentle. Silence speaks often so much more than words".
"It's a true story. She was an ex. She was with her new boyfriend - I didn't know that he existed. But we walked past each other, we caught each other's eye".
Recalling this incident where he crossed paths with his former lover with her new partner, James Blunt went on to say that he was "living a lifetime" for the split second, that the pair clapped eyes on each other, which inspired him to write 'You're Beautiful'.
"We lived a lifetime in that moment but I didn't do anything about it. I just went home and wrote a song about it and got a house out of it - the whole thing. So, I'm happy for them", Blunt added.
James Blunt who is currently married to Sofia Wellesley, topped the charts following the release of this track, selling 625,000 copies. The single also featured on his debut album from 2004 'Back To Bedlam', which became the best-selling album of the decade.