Metamaterials are artificially engineered structures that have properties, such as a negative refractive index, not attainable with naturally occurring materials. Negative-index metamaterials (NIMs) were first demonstrated for microwave frequencies, but it has been challenging to design NIMs for optical frequencies and they have so far been limited to optically thin samples because of significant fabrication challenges and strong energy dissipation in metals. Such thin structures are analogous to a monolayer of atoms, making it difficult to assign bulk properties such as the index of refraction. Negative refraction of surface plasmons was recently demonstrated but was confined to a two-dimensional waveguide. Three-dimensional (3D) optical metamaterials have come into focus recently, including the realization of negative refraction by using layered semiconductor metamaterials and a 3D magnetic metamaterial in the infrared frequencies; however, neither of these had a negative index of refraction. Here we report a 3D optical metamaterial having negative refractive index with a very high figure of merit of 3.5 (that is, low loss). This metamaterial is made of cascaded `fishnet' structures, with a negative index existing over a broad spectral range. Moreover, it can readily be probed from free space, making it functional for optical devices. We construct a prism made of this optical NIM to demonstrate negative refractive index at optical frequencies, resulting unambiguously from the negative phase evolution of the wave propagating inside the metamaterial. Bulk optical metamaterials open up prospects for studies of 3D optical effects and applications associated with NIMs and zero-index materials such as reversed Doppler effect, superlenses, optical tunnelling devices, compact resonators and highly directional sources.