ABSTRACT We present the discovery of the X-ray and optical afterglows of the short-duration GRB 150101B, pinpointing the event to an early-type host galaxy at z = 0.1343 ± 0.0030. This makes GRB 150101B the most nearby short gamma-ray burst (GRB) with an early-type host galaxy discovered to date. Fitting the spectral energy distribution of the host galaxy results in an inferred stellar mass of , stellar population age of ≈2–2.5 Gyr, and star formation rate of ≲0.4 M ⊙ yr−1. The host of GRB 150101B is one of the largest and most luminous short GRB host galaxies, with a B-band luminosity of and half-light radius of ≈8 kpc. GRB 150101B is located at a projected distance of 7.35 ± 0.07 kpc from its host center and lies on a faint region of its host rest-frame optical light. Its location, combined with the lack of associated supernova, is consistent with an NS–NS/NS–BH merger progenitor. From modeling the evolution of the broadband afterglow, we calculate isotropic-equivalent gamma-ray and kinetic energies of erg and erg, respectively, a circumburst density of cm−3, and a jet opening angle of ≳9°. Using observations extending to ≈30 days, we place upper limits of erg s−1 on associated kilonova emission. We compare searches following previous short GRBs to existing kilonova models and demonstrate the difficulty of performing effective kilonova searches from cosmological short GRBs using current ground-based facilities. We show that at the Advanced LIGO/VIRGO horizon distance of 200 Mpc, searches reaching depths of ≈23–24 AB mag are necessary to probe a meaningful range of kilonova models.