We present follow-up observations Based on observations obtained with the Apache Point Observatory 3.5-meter telescope , which is owned and operated by the Astrophysical Research Consortium . This paper includes data gathered with the 6.5 meter Magellan Telescopes located at Las Campanas Observatory , Chile . Support for the design and construction of the Magellan Echellette Spectrograph was received from the Observatories of the Carnegie Institution of Washington , the School of Science of the Massachusetts Institute of Technology , and the National Science Foundation in the form of a collaborative Major Research Instrument grant to Carnegie and MIT ( AST0215989 ) . and analysis of the recently discovered short period low-mass eclipsing binary , SDSS J001641-000925 . With an orbital period of 0.19856 days , this system has one of the shortest known periods for an M dwarf binary system . Medium-resolution spectroscopy and multi-band photometry for the system are presented . Markov chain Monte Carlo modeling of the light curves and radial velocities yields estimated masses for the stars of M _ { 1 } = 0.54 \pm 0.07 M _ { \odot } and M _ { 2 } = 0.34 \pm 0.04 M _ { \odot } , and radii of R _ { 1 } = 0.68 \pm . 03 R _ { \odot } and R _ { 2 } = 0.58 \pm 0.03 R _ { \odot } respectively . This solution places both components above the critical Roche overfill limit , providing strong evidence that SDSS J001641-000925 is the first verified M-dwarf contact binary system . Within the follow-up spectroscopy we find signatures of non-solid body rotation velocities , which we interpret as evidence for mass transfer or loss within the system . In addition , our photometry samples the system over 9 years , and we find strong evidence for period decay at the rate of \dot { P } \sim 8 s yr ^ { -1 } . Both of these signatures raise the intriguing possibility that the system is in over-contact , and actively losing angular momentum , likely through mass loss . This places SDSS J001641-000925 as not just the first M-dwarf over-contact binary , but one of the few systems of any spectral type known to be actively undergoing coalescence . Further study SDSS J001641-000925 is on-going to verify the nature of the system , which may prove to be a unique astrophysical laboratory .