Traditionally, quantum entanglement has played a central role in foundational discussions of quantum mechanics. The measurement of correlations between entangled particles can exhibit results at odds with classical behavior. These discrepancies increase exponentially with the number of entangled particles. When entanglement is extended from just two quantum bits (qubits) to three, the incompatibilities between classical and quantum correlation properties can change from a violation of inequalities involving statistical averages to sign differences in deterministic observations. With the ample confirmation of quantum mechanical predictions by experiments, entanglement has evolved from a philosophical conundrum to a key resource for quantum-based technologies, like quantum cryptography and computation. In particular, maximal entanglement of more than two qubits is crucial to the implementation of quantum error correction protocols. While entanglement of up to 3, 5, and 8 qubits has been demonstrated among spins, photons, and ions, respectively, entanglement in engineered solid-state systems has been limited to two qubits. Here, we demonstrate three-qubit entanglement in a superconducting circuit, creating Greenberger-Horne-Zeilinger (GHZ) states with fidelity of 88%, measured with quantum state tomography. Several entanglement witnesses show violation of bi-separable bounds by 830\pm80%. Our entangling sequence realizes the first step of basic quantum error correction, namely the encoding of a logical qubit into a manifold of GHZ-like states using a repetition code. The integration of encoding, decoding and error-correcting steps in a feedback loop will be the next milestone for quantum computing with integrated circuits.