The present invention discloses an apparatus and method for color measurement and color grading of faceted gemstones, diamonds and the like. The apparatus comprises a spectrometer, a computer, and a dual integrating sphere measurement arrangement comprising a measurement integrating sphere, a sample integrating sphere, a sample platform, a filter, a lens system, a baffle and a light source. The measurement geometry of the dual integrating sphere measurement arrangement is diffuse illumination and 8 degree viewing with the specular component excluded, plus diffuse white background provided by the sample integrating sphere. The sample integrating sphere encloses a sample to provide a constant environment for simulating the visual color grading environment. A novel three-step calibration insures an accurate spectral measurement of the sample inside the measurement integrating sphere. The computer controls the spectrometer and provides measurement parameters calculated from the physical parameters of the measured sample, including, but not limited to, shape, dimensions, refractive index, intensity of fluorescence and cut grade. The computer then calculates the spectral reflectance and calorimetric data, and determines an average color grade by checking a look-up-table that represents the relationship between the CIELAB coordinate and the average color grade. The computer also determines a true color grade based upon the average color grade and the physical parameters, using mathematical analyses and algorithms.