We report unusual effects of nonmagnetic impurities on the spin-triplet superconductor Sr2RuO4. The substitution of nonmagnetic Ti4+ for Ru4+ induces localized-moment magnetism characterized by unexpected Ising anisotropy with the easy axis along the interlayer c direction. Furthermore, for x(Ti) > 0.03 magnetic ordering occurs in the metallic state with the remnant magnetization along the c-axis. We argue that the localized moments are induced in the Ru4+ and/or oxygen ions surrounding Ti4+ and that the ordering is due to their interaction mediated by itinerant Ru-4d electrons with strong spin fluctuations.
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