We present ground-based optical and Hubble Space Telescope optical and near-IR observations of the short-hard GRB130603B at z=0.356, which demonstrate the presence of excess near-IR emission matching the expected brightness and color of an r-process powered transient (a kilonova). The early afterglow fades rapidly with alpha<-2.6 at t~8-32 hr post-burst and has a spectral index of beta=-1.5 (F_nu t^alpha*nu^beta), leading to an expected near-IR brightness at the time of the first HST observation of m(F160W)>29.3 AB mag. Instead, the detected source has m(F160W)=25.8+/-0.2 AB mag, corresponding to a rest-frame absolute magnitude of M(J)=-15.2 mag. The upper limit in the HST optical observations is m(F606W)>27.7 AB mag (3-sigma), indicating an unusually red color of V-H>1.9 mag. Comparing the observed near-IR luminosity to theoretical models of kilonovae produced by ejecta from the merger of an NS-NS or NS-BH binary, we infer an ejecta mass of M_ej~0.03-0.08 Msun for v_ej=0.1-0.3c. The inferred mass matches the expectations from numerical merger simulations. The presence of a kilonova provides the strongest evidence to date that short GRBs are produced by compact object mergers, and provides initial insight on the ejected mass and the primary role that compact object merger may play in the r-process. Equally important, it demonstrates that gravitational wave sources detected by Advanced LIGO/Virgo will be accompanied by optical/near-IR counterparts with unusually red colors, detectable by existing and upcoming large wide-field facilities (e.g., Pan-STARRS, DECam, Subaru, LSST).
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