We report the discovery of the first transneptunian object known to be on a retrograde orbit. The discovery was made during an outer solar system survey using the Canada-France-Hawaii Telescope (CFHT). After recovery observations on the MMT, CTIO-Blanco, Gemini-South, and CFHT telescopes, we can state with certainty that the object is both transneptunian and orbits the Sun in a retrograde sense, with an orbital inclination i = 104 deg. The object has IAU Minor Planet Center provisional designation 2008 KV42 and temporary nickname "Drac." Numerical integration of a set of initial states consistent with the astrometry shows that the semimajor axis is a sime 42 AU, the perihelion distance is q~21 AU, and that the object's orbit evolves on ~30 million year timescales via gravitational encounters with Uranus and Neptune. The object is unlikely to be primordial and thus needs a supply mechanism from a long-lived source. We outline several scenarios which could have emplaced the object on its current orbit, including a currently unobserved reservoir of large-inclination orbits beyond Neptune which may also supply the Halley-type comets.