FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP OF SECURITIES Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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(Print or Type Responses)

1. Name and Address of Reporting Person * PALMOUR JOHN W   2. Issuer Name and Ticker or Trading Symbol CREE INC [CREE] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) __X__ Director _____ 10% Owner _____ Officer (give title below) _____ Other (specify below) (Last) (First) (Middle) C/O CREE, INC., 4600 SILICON DRIVE 3. Date of Earliest Transaction (Month/Day/Year) 05/27/2009 (Street) DURHAM, NC 27703 4. If Amendment, Date Original Filed(Month/Day/Year) 6. Individual or Joint/Group Filing(Check Applicable Line) _X_ Form filed by One Reporting Person ___ Form filed by More than One Reporting Person (City) (State) (Zip) Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned

1.Title of Security (Instr. 3) 2. Transaction Date (Month/Day/Year) 2A. Deemed Execution Date, if any (Month/Day/Year) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price COMMON STOCK 05/27/2009   M   35,000 A $ 19.88 755,258 D   COMMON STOCK 05/27/2009   S(1)   10,000 D $ 30.4 745,258 D   COMMON STOCK 05/27/2009   S(1)   15,000 D $ 31.1059 730,258 D   COMMON STOCK 05/27/2009   S(1)   10,000 D $ 31.1007 720,258 D   COMMON STOCK 05/27/2009   S(1)   10,000 D $ 31.3006 710,258 D   COMMON STOCK 05/27/2009   S(1)   10,000 D $ 31.25 700,258 D   COMMON STOCK 05/27/2009   S(1)   10,000 D $ 31.3721 690,258 (2) D (3)

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Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned
(e.g., puts, calls, warrants, options, convertible securities)

1. Title of Derivative Security (Instr. 3)

2. Conversion or Exercise Price of Derivative Security

3. Transaction Date (Month/Day/Year)

3A. Deemed Execution Date, if any (Month/Day/Year)

4. Transaction Code (Instr. 8)

5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5)

6. Date Exercisable and Expiration Date (Month/Day/Year)

7. Title and Amount of Underlying Securities (Instr. 3 and 4)

8. Price of Derivative Security (Instr. 5)

9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4)

10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4)

11. Nature of Indirect Beneficial Ownership (Instr. 4)

Code

V

(A)

(D)

Date Exercisable

Expiration Date

Title

Amount or Number of Shares

NONQUALIFIED STOCK OPTION (RIGHT TO BUY)

$ 19.88

05/27/2009

M

35,000

10/13/2004(4)

10/13/2010

COMMON STOCK

35,000

$ 0

0

D

Reporting Owners

Reporting Owner Name / Address	Relationships
	Director	10% Owner	Officer	Other
PALMOUR JOHN W C/O CREE, INC. 4600 SILICON DRIVE DURHAM, NC 27703	X

Signatures

John W. Palmour		05/29/2009
**Signature of Reporting Person		Date

Explanation of Responses:

*	If the form is filed by more than one reporting person, see Instruction 4(b)(v).
**	Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).
(1)	The sales reported on this Form 4 were effected pursuant to a Rule 10b5-1 trading plan adopted by Dr. Palmour on February 13, 2009.
(2)	Includes 371 shares purchased by Dr. Palmour on April 30, 2009 under the company's 2005 Employee Stock Purchase Plan.
(3)	Of the 690,258 shares reported, 650,258 shares are held directly by Dr. Palmour and 40,000 shares are held indirectly by Dr. Palmour's spouse.
(4)	Option vested and became exercisable as to 15,000 shares on October 13, 2004 and as to 10,000 shares on each of October 13, 2005 and October 13, 2006.

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