Fossil remains of a small owl found in eight separate localities on Bermuda ranging in age from the end of the last interglacial period (Marine Isotope Stage 5a, ca. 80,000 years ago) and up into the Holocene are described here as a new species, Aegolius gradyi, the only representative of its genus known from a remote oceanic island. This differed from its probable North American ancestor, A. acadicus, in its more robust hindlimb elements, smaller head, and a possible tendency for smaller wing elements. Its colonization was probably made possible by the unique conditions of suitable habitat for hunting, roosting, and nesting afforded by Bermuda, including the presence of woodpeckers (Picidae) that would have excavated nest sites suitable for the owls in the endemic palm trees (Sabal bermudana). From accounts dating to the early 1600s, the species appears likely to have persisted into the historic period.