Backflow is a counter-intuitive phenomenon in which a forward propagating quantum particle propagates locally backwards. The actual counter-propagation property associated with this delicate interference phenomenon has not been observed to date in any field of physics. Here, we report the observation of transverse optical backflow where a beam of light propagating to a specific transverse direction is measured locally to propagate in the opposite direction. This observation is relevant to any physical system supporting coherent waves and might lead to unique applications.