We report the first observation of the Dalitz decay η′→γe+e−, based on a data sample of 1.31 billion J/ψ events collected with the BESIII detector. The η′ mesons are produced via the J/ψ→γη′ decay process. The ratio Γ(η′→γe+e−)/Γ(η′→γγ) is measured to be (2.13±0.09(stat)±0.07(sys))×10−2. This corresponds to a branching fraction B(η′→γe+e−)=(4.69±0.20(stat)±0.23(sys))×10−4. The transition form factor is extracted and different expressions are compared to the measured dependence on the e+e− invariant mass. The results are consistent with the prediction of the vector meson dominance model.