The European Organisation for Astronomical Research in the Southern Hemisphere, commonly referred to as the European Southern Observatory (ESO), is an intergovernmental research organisation made up of 16 member states for ground-based astronomy. Created in 1962, ESO has provided astronomers with state-of-the-art research facilities and access to the southern sky. The organisation employs over 750 staff members and receives annual member state contributions of approximately €162 million. Its observatories are located in northern Chile.

ESO has built and operated some of the largest and most technologically advanced telescopes. These include the 3.6 m New Technology Telescope, an early pioneer in the use of active optics, and the Very Large Telescope (VLT), which consists of four individual 8.2 m telescopes and four smaller auxiliary telescopes which can all work together or separately. The Atacama Large Millimeter Array observes the universe in the millimetre and submillimetre wavelength ranges, and is the world's largest ground-based astronomy project to date. It was completed in March 2013 in an international collaboration by Europe (represented by ESO), North America, East Asia and Chile.

Currently under construction is the Extremely Large Telescope. It will use a 39.3-metre-diameter segmented mirror, and become the world's largest optical reflecting telescope when operational towards the end of this decade. Its light-gathering power will allow detailed studies of planets around other stars, the first objects in the universe, supermassive black holes, and the nature and distribution of the dark matter and dark energy which dominate the universe.

ESO's observing facilities have made astronomical discoveries and produced several astronomical catalogues. Its findings include the discovery of the most distant gamma-ray burst and evidence for a black hole at the centre of the Milky Way. In 2004, the VLT allowed astronomers to obtain the first picture of an extrasolar planet (2M1207b) orbiting a brown dwarf 173 light-years away. The High Accuracy Radial Velocity Planet Searcher (HARPS) instrument installed on the older ESO 3.6 m telescope led to the discovery of extrasolar planets, including Gliese 581c—one of the smallest planets seen outside the Solar System.

The idea that European astronomers should establish a common large observatory was broached by Walter Baade and Jan Oort at the Leiden Observatory in the Netherlands in spring 1953. It was pursued by Oort, who gathered a group of astronomers in Leiden to consider it on 21 June that year. Immediately thereafter, the subject was further discussed at the Groningen conference in the Netherlands. On 26 January 1954, an ESO declaration was signed by astronomers from six European countries expressing the wish that a joint European observatory be established in the southern hemisphere.

At the time, all reflector telescopes with an aperture of 2 metres or more were located in the northern hemisphere. The decision to build the observatory in the southern hemisphere resulted from the necessity of observing the southern sky; some research subjects (such as the central parts of the Milky Way and the Magellanic Clouds) were accessible only from the southern hemisphere.

It was initially planned to set up telescopes in South Africa where several European observatories were located (Boyden Observatory), but tests from 1955 to 1962 demonstrated that a site in the Andes was preferable: When Jürgen Stock enthusiastically reported his observations from Chile, Otto Heckmann decided to leave the South African project on hold. ESO—at that time about to sign the contracts with South Africa—decided to establish their observatory in Chile. The ESO Convention was signed 5 October 1962 by Belgium, Germany, France, the Netherlands and Sweden. Otto Heckmann was nominated as the organisation's first director general on 1 November 1962. On 15 November 1963 Chile was chosen as the site for ESO's observatory.

A preliminary proposal for a convention of astronomy organisations in these five countries was drafted in 1954. Although some amendments were made in the initial document, the convention proceeded slowly until 1960 when it was discussed during that year's committee meeting. The new draft was examined in detail, and a council member of CERN (the European Organization for Nuclear Research) highlighted the need for a convention between governments (in addition to organisations). The convention and government involvement became pressing due to rapidly rising costs of site-testing expeditions. The final 1962 version was largely adopted from the CERN convention, due to similarities between the organisations and the dual membership of some members.