2D materials are promising candidates for next-generation electronic devices. In this regime, insulating 2D ferromagnets, which remain rare, are of special importance due to their potential for enabling new device architectures. Here the discovery of ferromagnetism is reported in a layered van der Waals semiconductor, VI3, which is based on honeycomb vanadium layers separated by an iodine-iodine van der Waals gap. It has a BiI3-type structure (R (3) over bar, No.148) at room temperature, and the experimental evidence suggests that it may undergo a subtle structural phase transition at 78 K. VI3 becomes ferromagnetic at 49 K, below which magneto-optical Kerr effect imaging clearly shows ferromagnetic domains, which can be manipulated by the applied external magnetic field. The optical bandgap determined by reflectance measurements is 0.6 eV, and the material is highly resistive.