Abstract
7 pages, 2 figures, version 2 is shortenend for PRL with added references; We present the first observation of exclusive $e^+e^-$ production in hadron-hadron collisions, using $p\bar{p}$ collision data at \mbox{$\sqrt{s}=1.96$ TeV} taken by the Run II Collider Detector at Fermilab, and corresponding to an integrated luminosity of \mbox{532 pb$^{-1}$}. We require the absence of any particle signatures in the detector except for an electron and a positron candidate, each with transverse energy {$E_T>5$ GeV} and pseudorapidity {$|\eta|<2$}. With these criteria, 16 events are observed compared to a background expectation of {$1.9\pm0.3$} events. These events are consistent in cross section and properties with the QED process \mbox{$p\bar{p} \to p + e^+e^- + \bar{p}$} through two-photon exchange. The measured cross section is \mbox{$1.6^{+0.5}_{-0.3}\mathrm{(stat)}\pm0.3\mathrm{(syst)}$ pb}. This agrees with the theoretical prediction of {$1.71 \pm 0.01$ pb}.