VERITAS (the Very Energetic Radiation Imaging Telescope Array System) is the next generation ground-based gamma-ray observatory that is being built in southern Arizona by a collaboration of ten institutions in Canada, Ireland, the U.K. and the U.S.A. VERITAS is designed to operate in the range from 50 GeV to 50 TeV with optimal sensitivity near 200 GeV; it will effectively overlap with the next generation of space-based gamma-ray telescopes. The first phase of VERITAS, consisting of four telescopes of 12 m aperture, will be operational by the time of the GLAST launch in 2007. Eventually the array will be expanded to include the full array of seven telescopes on a filled hexagonal grid of side 80 m. A prototype VERITAS telescope with a reduced number of mirrors and signal channels has been built. Its design and performance is described here. The prototype is scheduled to be upgraded to a full 499 pixel camera with 350 mirrors during the autumn of 2004.