The first observation of the decay B0s→ϕK¯¯¯∗0 is reported. The analysis is based on a data sample corresponding to an integrated luminosity of 1.0 fb−1 of pp collisions at s√=7 TeV, collected with the LHCb detector. A yield of 30 ± 6 B0s→(K+K−)(K−π+) decays is found in the mass windows 1012.5 < M (K + K −) < 1026.5 MeV/c 2 and 746 < M(K − π +) < 1046 MeV/c 2. The signal yield is found to be dominated by B0s→ϕK¯¯¯∗0 decays, and the corresponding branching fraction is measured to be B(B0s→ϕK¯¯¯∗0) = (1.10 ± 0.24 (stat) ± 0.14 (syst) ± 0.08 (f d /f s )) × 10−6, where the uncertainties are statistical, systematic and from the ratio of fragmentation fractions f d /f s which accounts for the different production rate of B 0 and B0s mesons. The significance of B0s→ϕK¯¯¯∗0 signal is 6.1 standard deviations. The fraction of longitudinal polarization in B0s→ϕK¯¯¯∗0 decays is found to be f 0 = 0.51 ± 0.15 (stat) ± 0.07 (syst).