content: <PAGE>
  
                        SECURITIES AND EXCHANGE COMMISSION
  
                              Washington, D.C. 20549
  
                                  _______________
  
                                    FORM 8-K
  
                                  CURRENT REPORT
  
  
                      Pursuant to Section 13 or 15(d) of the
  
                          Securities Exchange Act of 1934
  
  
  
  Date of Report (Date of earliest event reported) April 6, 2001
                                                   ------------------------------
  
  
  
                               Digital Island, Inc.
                -------------------------------------------------
                (Exact name of registrant as specified in charter)
  
  
                    Delaware              000-26283        680322824
         ------------------------------  -----------   ------------------
          (State or other jurisdiction    (Commission   (IRS Employer
             of incorporation)            File Number)  Identification No.)
  
  
    45 Fremont Street, 12th Floor, San Francisco, California          94105
   ----------------------------------------------------------         -----
  (Address of principal executive offices)                         (Zip Code)
  
  
  
  Registrant's telephone number, including area code     (415) 738-4100
                                                         --------------
  
  
  
                                  Not Applicable
           ------------------------------------------------------------
          (Former name or former address, if changed since last report.)
  <PAGE>
  
  Item 5    OTHER EVENTS
  ------    ------------
  
       On April 6, 2001, the board of directors of Digital Island, Inc. ("Digital
  Island") authorized the implementation of an option exchange program for members
  of its senior management (the "Option Exchange Program") and also granted
  additional options to its employees pursuant to its 1999 Stock Incentive Plan
  (the "1999 Plan") and its 2000 Supplemental Stock Option Plan (the "Supplemental
  Plan", and collectively, the "Plans"), as part of a retention initiative to
  address the recent decline in the price of Digital Island's common stock and the
  resulting failure of the outstanding employee stock options to serve as a
  meaningful incentive for continued employment.
  
       Under the Option Exchange Program, members of Digital Island's senior
  management (14 individuals) were given the opportunity to exchange certain of
  their outstanding options with exercise prices above a designated price per
  share for shares of restricted common stock of Digital Island (the "Restricted
  Common Stock"). The number of shares of Restricted Common Stock that each
  individual was entitled to receive depended on the number of options exchanged
  and the exercise price of such options. The Option Exchange Program was
  concluded on April 23, 2001, and the eligible individuals who participated in
  the program exchanged outstanding options to purchase an aggregate of
  approximately 3.1 million shares of Digital Island common stock for an aggregate
  of approximately 1.3 million shares of Restricted Common Stock. The shares of
  Restricted Common Stock were issued out of the share reserve under the 1999 Plan
  upon the participant's payment of the $.001 per share par value. The Restricted
  Common Stock will vest in a series of installments over a 3-year period of
  continued service with Digital Island, as provided in the Restricted Stock
  Issuance Agreement. The options exchanged for the Restricted Common Stock were
  cancelled, and the shares of Digital Island common stock underlying those
  cancelled options were returned to the share reserve under the 1999 Plan.
  
       Digital Island employees who were not eligible for the Option Exchange
  Program received supplemental stock option grants under the Plans on April 6,
  2001, representing in the aggregate approximately 1.8 million shares of Digital
  Island common stock (the "Supplemental Options"). The exercise price of the
  Supplemental Options was $1.28, the last reported trading price of Digital
  Island common stock on the April 6, 2001 grant date. The Supplemental Options
  are subject to a 2-year vesting schedule, with each Supplemental Option to
  become exercisable for 50% of the option shares upon completion of twelve months
  of service measured from the grant date and with the remaining fifty percent to
  become exercisable in successive equal monthly installments over the next 12
  months of service thereafter.
  
       Digital Island implemented the Option Exchange Program and granted the
  Supplemental Options because it believed that the outstanding options with
  exercise prices significantly in excess of the current market price of Digital
  Island's common stock were not providing sufficient incentives for employee
  retention and performance. Digital Island believes that the Option Exchange
  Program and the Supplemental Option grants will provide improved performance and
  retention incentives to employees and thereby maximize stockholder value.
  Neither Digital Island nor its board of directors made any recommendation as to
  whether the members of senior management should exchange their options for
  Restricted Common Stock under the Option Exchange Program.
  
                                         2
  <PAGE>
  
       The form of Summary Letter of Options Exchange, Option Exchange Offer
  Question and Answer Summary and form of Restricted Stock Issuance Agreement are
  incorporated herein by reference in their entirety as Exhibits 99.1, 99.2 and
  99.3, respectively.
  
  
  Item 7    FINANCIAL STATEMENTS AND EXHIBITS
  ------    ---------------------------------
  
       (c)  Exhibits.    The following documents are filed as an exhibit to this
            --------     report:
  
            99.1         Form of Summary Letter of Option Exchange Program
  
            99.2         Option Exchange Offer Question and Answer Summary
  
            99.3         Form of Restricted Stock Issuance Agreement
  
                                         3
  <PAGE>
  
                                    SIGNATURES
  
            Pursuant to the requirements of the Securities Exchange Act of 1934,
  the registrant has duly caused this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
  
  
                                          Digital Island, Inc.
                                          (Registrant)
  
  
  Date: May 7, 2001                    By: /s/ Howard Lasky
                                          _____________________________
                                          Howard Lasky
                                          Vice President, General Counsel
                                          and Secretary
  
                                         4
  <PAGE>
  
                                  EXHIBITS INDEX
                                  --------------
  
  
            Exhibit     Description
            -------     -----------
  
            99.1        Form of Summary Letter of Option Exchange Program
  
            99.2        Option Exchange Offer Question and Answer Summary
  
            99.3        Form of Restricted Stock Issuance Agreement
  
                                         5
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text: SECURITIES AND EXCHANGE COMMISSION
  
                              Washington, D.C. 20549
  
                                  _______________
  
                                    FORM 8-K
  
                                  CURRENT REPORT
  
                      Pursuant to Section 13 or 15(d) of the
  
                          Securities Exchange Act of 1934
  
  Date of Report (Date of earliest event reported) April 6, 2001
                                                   ------------------------------
  
                               Digital Island, Inc.
                -------------------------------------------------
                (Exact name of registrant as specified in charter)
  
                    Delaware              000-26283        680322824
         ------------------------------  -----------   ------------------
          (State or other jurisdiction    (Commission   (IRS Employer
             of incorporation)            File Number)  Identification No.)
  
    45 Fremont Street, 12th Floor, San Francisco, California          94105
   ----------------------------------------------------------         -----
  (Address of principal executive offices)                         (Zip Code)
  
  Registrant's telephone number, including area code     (415) 738-4100
                                                         --------------
  
                                  Not Applicable
           ------------------------------------------------------------
          (Former name or former address, if changed since last report.)
  Item 5    OTHER EVENTS
  ------    ------------
  
       On April 6, 2001, the board of directors of Digital Island, Inc. ("Digital
  Island") authorized the implementation of an option exchange program for members
  of its senior management (the "Option Exchange Program") and also granted
  additional options to its employees pursuant to its 1999 Stock Incentive Plan
  (the "1999 Plan") and its 2000 Supplemental Stock Option Plan (the "Supplemental
  Plan", and collectively, the "Plans"), as part of a retention initiative to
  address the recent decline in the price of Digital Island's common stock and the
  resulting failure of the outstanding employee stock options to serve as a
  meaningful incentive for continued employment.
  
       Under the Option Exchange Program, members of Digital Island's senior
  management (14 individuals) were given the opportunity to exchange certain of
  their outstanding options with exercise prices above a designated price per
  share for shares of restricted common stock of Digital Island (the "Restricted
  Common Stock"). The number of shares of Restricted Common Stock that each
  individual was entitled to receive depended on the number of options exchanged
  and the exercise price of such options. The Option Exchange Program was
  concluded on April 23, 2001, and the eligible individuals who participated in
  the program exchanged outstanding options to purchase an aggregate of
  approximately 3.1 million shares of Digital Island common stock for an aggregate
  of approximately 1.3 million shares of Restricted Common Stock. The shares of
  Restricted Common Stock were issued out of the share reserve under the 1999 Plan
  upon the participant's payment of the $.001 per share par value. The Restricted
  Common Stock will vest in a series of installments over a 3-year period of
  continued service with Digital Island, as provided in the Restricted Stock
  Issuance Agreement. The options exchanged for the Restricted Common Stock were
  cancelled, and the shares of Digital Island common stock underlying those
  cancelled options were returned to the share reserve under the 1999 Plan.
  
       Digital Island employees who were not eligible for the Option Exchange
  Program received supplemental stock option grants under the Plans on April 6,
  2001, representing in the aggregate approximately 1.8 million shares of Digital
  Island common stock (the "Supplemental Options"). The exercise price of the
  Supplemental Options was $1.28, the last reported trading price of Digital
  Island common stock on the April 6, 2001 grant date. The Supplemental Options
  are subject to a 2-year vesting schedule, with each Supplemental Option to
  become exercisable for 50% of the option shares upon completion of twelve months
  of service measured from the grant date and with the remaining fifty percent to
  become exercisable in successive equal monthly installments over the next 12
  months of service thereafter.
  
       Digital Island implemented the Option Exchange Program and granted the
  Supplemental Options because it believed that the outstanding options with
  exercise prices significantly in excess of the current market price of Digital
  Island's common stock were not providing sufficient incentives for employee
  retention and performance. Digital Island believes that the Option Exchange
  Program and the Supplemental Option grants will provide improved performance and
  retention incentives to employees and thereby maximize stockholder value.
  Neither Digital Island nor its board of directors made any recommendation as to
  whether the members of senior management should exchange their options for
  Restricted Common Stock under the Option Exchange Program.
  
                                         2
  The form of Summary Letter of Options Exchange, Option Exchange Offer
  Question and Answer Summary and form of Restricted Stock Issuance Agreement are
  incorporated herein by reference in their entirety as Exhibits 99.1, 99.2 and
  99.3, respectively.
  
  Item 7    FINANCIAL STATEMENTS AND EXHIBITS
  ------    ---------------------------------
  
       (c)  Exhibits.    The following documents are filed as an exhibit to this
            --------     report:
  
            99.1         Form of Summary Letter of Option Exchange Program
  
            99.2         Option Exchange Offer Question and Answer Summary
  
            99.3         Form of Restricted Stock Issuance Agreement
  
                                         3
  SIGNATURES
  
            Pursuant to the requirements of the Securities Exchange Act of 1934,
  the registrant has duly caused this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
                                          Digital Island, Inc.
                                          (Registrant)
  
  Date: May 7, 2001                    By: /s/ Howard Lasky
                                          _____________________________
                                          Howard Lasky
                                          Vice President, General Counsel
                                          and Secretary
  
                                         4
  EXHIBITS INDEX
                                  --------------
  
            Exhibit     Description
            -------     -----------
  
            99.1        Form of Summary Letter of Option Exchange Program
  
            99.2        Option Exchange Offer Question and Answer Summary
  
            99.3        Form of Restricted Stock Issuance Agreement
  
                                         5