We report the discovery of a nearby dwarf galaxy in the constellation of Hydrus , between the Large and the Small Magellanic Clouds . Hydrus 1 is a mildy elliptical ultra-faint system with luminosity M _ { V } \sim - 4.7 and size \sim 50 pc , located 28 kpc from the Sun and 24 kpc from the LMC . From spectroscopy of \sim 30 member stars , we measure a velocity dispersion of 2.7 km s ^ { -1 } and find tentative evidence for a radial velocity gradient consistent with 3 km s ^ { -1 } rotation . Hydrus 1 ’ s velocity dispersion indicates that the system is dark matter dominated , but its dynamical mass-to-light ratio M/L \sim 66 is significantly smaller than typical for ultra-faint dwarfs at similar luminosity . The kinematics and spatial position of Hydrus 1 make it a very plausible member of the family of satellites brought into the Milky Way by the Magellanic Clouds . While Hydrus 1 ’ s proximity and well-measured kinematics make it a promising target for dark matter annihilation searches , we find no evidence for significant gamma-ray emission from Hydrus 1 . The new dwarf is a metal-poor galaxy with a mean metallicity [ Fe/H ] = -2.5 and [ Fe/H ] spread of 0.4 dex , similar to other systems of similar luminosity . Alpha-abundances of Hyi 1 members indicate that star-formation was extended , lasting between 0.1 and 1 Gyr , with self-enrichment dominated by SN Ia . The dwarf also hosts a highly carbon-enhanced extremely metal-poor star with [ Fe/H ] \sim -3.2 and [ C/Fe ] \sim +3.0 .