Nanoplasmonics — the nanoscale manipulation of surface plasmons (fluctuations in the electron density at a metallic surface) — could revolutionize applications ranging from sensing and biomedicine to imaging and information technology. But first, we need a simple and efficient method for actively generating coherent plasmonic fields. This is in theory possible with the spaser, first proposed in 2003 as a device that generates and amplifies surface plasmons in the same way that a laser generates and amplifies photons. Now Noginov et al. present the first unambiguous experimental demonstration of spasing, using 44-nm diameter nanoparticles with a gold core and dye-doped silica shell. The system generates stimulated emission of surface plasmons in the same way as a laser generates stimulated emission of coherent photons, and has been used to implement the smallest nanolaser reported to date, and the first operating at visible wavelengths. Nanoplasmonics promises to revolutionize applications ranging from sensing and biomedicine to imaging and information technology, but its full development is hindered by the lack of devices that can generate coherent plasmonic fields. In theory, this is possible with a so-called 'spaser' — analogous to a laser — which would generate stimulated emission of surface plasmons. This is now realized experimentally, and should enable many new technological developments. One of the most rapidly growing areas of physics and nanotechnology focuses on plasmonic effects on the nanometre scale, with possible applications ranging from sensing and biomedicine to imaging and information technology1,2. However, the full development of nanoplasmonics is hindered by the lack of devices that can generate coherent plasmonic fields. It has been proposed3 that in the same way as a laser generates stimulated emission of coherent photons, a ‘spaser’ could generate stimulated emission of surface plasmons (oscillations of free electrons in metallic nanostructures) in resonating metallic nanostructures adjacent to a gain medium. But attempts to realize a spaser face the challenge of absorption loss in metal, which is particularly strong at optical frequencies. The suggestion4,5,6 to compensate loss by optical gain in localized and propagating surface plasmons has been implemented recently7,8,9,10 and even allowed the amplification of propagating surface plasmons in open paths11. Still, these experiments and the reported enhancement of the stimulated emission of dye molecules in the presence of metallic nanoparticles12,13,14 lack the feedback mechanism present in a spaser. Here we show that 44-nm-diameter nanoparticles with a gold core and dye-doped silica shell allow us to completely overcome the loss of localized surface plasmons by gain and realize a spaser. And in accord with the notion that only surface plasmon resonances are capable of squeezing optical frequency oscillations into a nanoscopic cavity to enable a true nanolaser15,16,17,18, we show that outcoupling of surface plasmon oscillations to photonic modes at a wavelength of 531 nm makes our system the smallest nanolaser reported to date—and to our knowledge the first operating at visible wavelengths. We anticipate that now it has been realized experimentally, the spaser will advance our fundamental understanding of nanoplasmonics and the development of practical applications.