We report the discovery of extended gamma-ray emission measured by the Large Area Telescope (LAT) onboard the Fermi Gamma-ray Space Telescope in the region of the supernova remnant (SNR) HB3 (G132.7+1.3) and the W3 HII complex adjacent to the southeast of the remnant. W3 is spatially associated with bright 12CO (J=1-0) emission. The gamma-ray emission is spatially correlated with this gas and the SNR. We discuss the possibility that gamma rays originate in interactions between particles accelerated in the SNR and interstellar gas or radiation fields. The decay of neutral pions produced in nucleon-nucleon interactions between accelerated hadrons and interstellar gas provides a reasonable explanation for the gamma-ray emission. The emission from W3 is consistent with irradiation of the CO clouds by the cosmic rays accelerated in HB3.