Symmetry, dimensionality, and interaction are crucial ingredients for phase transitions and quantum states of matter. As a prominent example, the integer quantum Hall effect (QHE) represents a topological phase generally regarded as characteristic for two-dimensional (2D) electronic systems, and its many aspects can be understood without invoking electron-electron interaction. The intriguing possibility of generalizing QHE to three-dimensional (3D) systems was proposed decades ago, yet it remains elusive experimentally. Here, we report clear experimental evidence for the 3D QHE observed in bulk ZrTe5 crystals. Owing to the extremely high sample quality, the extreme quantum limit with only the lowest Landau level occupied can be achieved by an applied magnetic field as low as 1.5 T. Remarkably, in this regime, we observe a dissipationless longitudinal resistivity rho_xx=0 accompanied with a well-developed Hall resistivity plateau rho_xy=(1pm0.1) h/e^2 (lambda_(F,z)/2), where lambda_(F,z) is the Fermi wavelength along the field direction (z axis). This striking result strongly suggests a Fermi surface instability driven by the enhanced interaction effects in the extreme quantum limit. In addition, with further increasing magnetic field, both rho_xx and rho_xy increase dramatically and display an interesting metal-insulator transition, representing another magnetic field driven quantum phase transition. Our findings not only unambiguously reveal a novel quantum state of matter resulting from an intricate interplay among dimensionality, interaction, and symmetry breaking, but also provide a promising platform for further exploration of more exotic quantum phases and transitions in 3D systems.
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