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The electrodynamics of topological insulators (TIs) is described by modified Maxwell's equations, which contain additional terms that couple an electric field to a magnetization and a magnetic field to a polarization of the medium, such that the coupling coefficient is quantized in odd multiples of α/4π per surface. Here we report on the observation of this so-called topological magnetoelectric effect. We use monochromatic terahertz (THz) spectroscopy of TI structures equipped with a semitransparent gate to selectively address surface states. In high external magnetic fields, we observe a universal Faraday rotation angle equal to the fine structure constant α=e2/2hc (in SI units) when a linearly polarized THz radiation of a certain frequency passes through the two surfaces of a strained HgTe 3D TI. These experiments give insight into axion electrodynamics of TIs and may potentially be used for a metrological definition of the three basic physical constants. [ABSTRACT FROM AUTHOR]