GRAVITY is a new instrument to coherently combine the light of the European Southern Observatory Very Large Telescope Interferometer to form a telescope with an equivalent 130 m diameter angular resolution and a collecting area of 200 m 2 . The instrument comprises fiber fed integrated optics beam combination, high resolution spectroscopy, built-in beam analysis and control, near-infrared wavefront sensing, phasetracking, dual-beam operation, and laser metrology. GRAVITY opens up to optical/infrared interferometry the techniques of phase referenced imaging and narrow angle astrometry, in many aspects following the concepts of radio interferometry. This article gives an overview of GRAVITY and reports on the performance and the first astronomical observations during commissioning in 2015/16. We demonstrate phase-tracking on stars as faint as m K ≈ 10 mag, phase-referenced interferometry of objects fainter than m K ≈ 15 mag with a limiting magnitude of m K ≈ 17 mag, minute long coherent integrations, a visibility accuracy of better than 0.25%, and spectro-differential phase and closure phase accuracy better than 0.5• , corresponding to a differential astrometric precision of better than ten microarcseconds (µas). The dual-beam astrometry, measuring the phase difference of two objects with laser metrology, is still under commissioning. First observations show residuals as low as 50 µas when following objects over several months. We illustrate the instrument performance with the observations of archetypical objects for the different instrument modes. Examples include the Galactic center supermassive black hole and its fast orbiting star S2 for phase referenced dual-beam observations and infrared wavefront sensing, the high mass X-ray binary BP Cru and the active galactic nucleus of PDS 456 for a few µas spectro-differential astrometry, the T Tauri star S CrA for a spectro-differential visibility analysis, ξ Tel and 24 Cap for high accuracy visibility observations, and η Car for interferometric imaging with GRAVITY.