Optical systems combining balanced loss and gain profiles provide a unique platform to implement classical analogues of quantum systems described by non-Hermitian parity-time- (PT-) symmetric Hamiltonians and to originate new synthetic materials with novel properties. To date, experimental works on PT-symmetric optical systems have been limited to waveguides in which resonances do not play a role. Here we report the first demonstration of PT-symmetry breaking in optical resonator systems by using two directly coupled on-chip optical whispering-gallery-mode (WGM) microtoroid silica resonators. Gain in one of the resonators is provided by optically pumping Erbium (Er3+) ions embedded in the silica matrix; the other resonator exhibits passive loss. The coupling strength between the resonators is adjusted by using nanopositioning stages to tune their distance. We have observed reciprocal behavior of the PT-symmetric system in the linear regime, as well as a transition to nonreciprocity in the PT symmetry-breaking phase transition due to the significant enhancement of nonlinearity in the broken-symmetry phase. Our results represent a significant advance towards a new generation of synthetic optical systems enabling on-chip manipulation and control of light propagation.