The recently emerged fields of metamaterials and transformation optics promise a family of exciting applications such as invisibility, optical imaging with deeply subwavelength resolution and nanophotonics with the potential for much faster information processing. The possibility of creating optical negative-index metamaterials (NIMs) using nanostructured metal–dielectric composites has triggered intense basic and applied research over the past several years1, 2, 3, 4, 5, 6, 7, 8, 9, 10. However, the performance of all NIM applications is significantly limited by the inherent and strong energy dissipation in metals, especially in the near-infrared and visible wavelength ranges11, 12. Generally the losses are orders of magnitude too large for the proposed applications, and the reduction of losses with optimized designs seems to be out of reach. One way of addressing this issue is to incorporate gain media into NIM designs13, 14, 15, 16. However, whether NIMs with low loss can be achieved has been the subject of theoretical debate17, 18. Here we experimentally demonstrate that the incorporation of gain material in the high-local-field areas of a metamaterial makes it possible to fabricate an extremely low-loss and active optical NIM. The original loss-limited negative refractive index and the figure of merit (FOM) of the device have been drastically improved with loss compensation in the visible wavelength range between 722 and 738nm. In this range, the NIM becomes active such that the sum of the light intensities in transmission and reflection exceeds the intensity of the incident beam. At a wavelength of 737nm, the negative refractive index improves from −0.66 to −1.017 and the FOM increases from 1 to 26. At 738nm, the FOM is expected to become macroscopically large, of the order of 106. This study demonstrates the possibility of fabricating an optical negative-index metamaterial that is not limited by the inherent loss in its metal constituent.