They said it did this to make itself look big, warning potential predators not to eat it.
Then the octopus swam away and changed back to its camouflage colour.
While some researchers think the octopus was pushing water on the seafloor to chase prey out of their hideouts, others think it puffed up to try to scare the diver away.
The diver and film-maker who recorded the video, PT Hirschfield, spotted the octopus off the coast of Melbourne, Australia.
He was also one of the main stars of the joint HBO/BBC series Rome, where his portrayal of the soldier/politician Lucius Vorenus received critical acclaim.
Mc Kidd also starred in the premier of Caryl Churchill's newest play, Far Away.
An Australian diver filmed the moment an octopus suddenly puffed up, inflating itself with water.
She thought that the octopus was trying to intimidate and scare her away, but researchers can't agree on what caused it to behave this way.
Ballooning is a fairly common behaviour observed in hunting octopuses.
Subsequent roles include Malky Johnson in Small Faces.
In 2004, he played James Hepburn, 4th Earl of Bothwell, the third husband of Mary, Queen of Scots, in the BBC mini-series Gunpowder, Treason & Plot.
He also provides the voice of John "Soap" Mac Tavish in the video games Call of Duty: Modern Warfare 2 and Call of Duty: Modern Warfare 3.
He also played Poseidon in the film Percy Jackson & the Olympians: The Lightning Thief.