Using $1.31 times 10^9$ $J/psi$ events collected by the BESIII detector at the BEPCII $e^+e^-$ collider, we report the first observation of the $h_1(1380)$ in $J/psi to eta^{prime} h_1(1380)$ with a significance of more than ten standard deviations. The mass and width of the possible axial-vector strangeonium candidate $h_1(1380)$ are measured to be $M = (1423.2 pm 2.1 pm 7.3)mevcc$ and $Gamma = (90.3 pm 9.8 pm 17.5)mev$. The product branching fractions, assuming no interference, are determined to be $mathcal{B}(J/psi to eta^{prime}h_1(1380)) times mathcal{B}(h_1(1380) to K^{*}(892)^{+} K^{-} +c.c.) = (1.51 pm 0.09 pm 0.21) times 10^{-4}$ in $eta^{prime}K^+K^-pi^0$ mode and $mathcal{B}(J/psi to eta^{prime}h_1(1380)) times mathcal{B}(h_1(1380) to K^{*}(892)bar K +c.c.) = (2.16 pm 0.12 pm 0.29) times 10^{-4}$ in $eta^{prime}K_S^0K^{pm}pi^{mp}$ mode. The first uncertainties are statistical and the second are systematic. Isospin symmetry violation is observed in the decays $h_1(1380) to K^{*}(892)^{+} K^{-} +c.c.$ and $h_1(1380) to K^{*}(892)^{0}bar K^{0} +c.c.$. Based on the measured $h_1(1380)$ mass, the mixing angle between the states $h_1(1170)$ and $h_1(1380)$ is determined to be $(35.9pm2.6)^{circ}$, consistent with theoretical expectations.