The first observation of the decay Bs0 → φK̄*0 is reported. The analysis is based on a data sample corresponding to an integrated luminosity of 1.0 fb-1 of pp collisions at √s = 7 TeV, collected with the LHCb detector. A yield of 30 ± 6 Bs0 → (K+K-)(K -π+) decays is found in the mass windows 1012:5 < M(K+K) < 1026:5MeV/c2 and 746 < M(K -π+) < 1046MeV/c2. The signal yield is found to be dominated by Bs0 → φK̄* 0 decays, and the corresponding branching fraction is measured to be B(Bs0 → φK̄*0) = (1:10 ± 0:24 (stat) ± 0:14 (syst) ± 0:08 (fd/f s)) × 10-6, where the uncertainties are statistical, systematic and from the ratio of fragmentation fractions fd/f s which accounts for the different production rate of B0 and Bs0 mesons. The significance of Bs0 → φK̄*0 signal is 6.1 standard deviations. The fraction of longitudinal polarization in Bs0 → φK̄*0 decays is found to be f 0 = 0:51 ± 0:15 (stat) ± 0:07 (syst). Copyright CERN.