Abstract: We report the observation of the rare charm decay D-0 -> K-pi(+)e(+)e(-), based on 468 fb(-1) of e(+)e(-) annihilation data collected at or close to the center-of-mass energy of the (sic)(4S) resonance with the BABAR detector at the SLAC National Accelerator Laboratory. We find the branching fraction in the invariant mass range 0.675 < m(e(+)e(-)) < 0.875 GeV/c(2) of the electron-positron pair to be B(D-0 -> K-pi(+)e(+)e(-)) = (4.0 +/- 0.5 +/- 0.2 +/- 0.1) x 10(-6), where the first uncertainty is statistical, the second systematic, and the third due to the uncertainty in the branching fraction of the decay D-0 -> K-pi(+)pi(+)pi(-) used as a normalization mode. The significance of the observation corresponds to 9.7 standard deviations including systematic uncertainties. This result is consistent with the recently reported D-0 -> K-pi(+)mu(+)mu(-) branching fraction, measured in the same invariant mass range, and with the value expected in the standard model. In a set of regions of m(e(+)e(-)), where long-distance effects are potentially small, we determine a 90% confidence level upper limit on the branching fraction B(D-0 -> K-pi(+)e(+)e(-)) < 3.1 x 10(-6).