A new high-order adaptive optics system is now being commissioned at the Lick Observatory Shane 3-meter telescope in California. This system uses a high return efficiency sodium beacon and a combination of low and high-order deformable mirrors to achieve diffraction-limited imaging over a wide spectrum of infrared science wavelengths covering 0.8 to 2.2 microns. We present the design performance goals and the first on-sky test results. We discuss several innovations that make this system a pathfinder for next generation AO systems. These include a unique woofer-tweeter control that provides full dynamic range correction from tip/tilt to 16 cycles, variable pupil sampling wavefront sensor, new enhanced silver coatings developed at UC Observatories that improve science and LGS throughput, and tight mechanical rigidity that enables a multi-hour diffraction- limited exposure in LGS mode for faint object spectroscopy science.