ABSTRACTWe present spectroscopic and extensive photometric observations of supernova (SN) 1998de in the S0 galaxy NGC 252, discovered during the course of the Lick Observatory Supernova Search. These data, which span a time period of 8 days before to 76 days after B‐band maximum, unambiguously establish SN 1998de as a peculiar and subluminous Type Ia supernova (SN Ia) with strong similarities to SN 1991bg, the prototype of these intrinsically dim SNe Ia. We find that SN 1998de, which has Δm15(B) = 1.95 ± 0.09 mag, rises and declines much faster than normal SNe Ia and does not exhibit the usual plateau in the R band. In the I band it shows a short plateau phase or possibly a secondary maximum, soon after the first maximum. We find that subluminous SNe Ia with the same value of Δm15(B) can have slightly different light curves at longer wavelengths. The notable spectroscopic similarities between SN 1998de and SN 1991bg are the wide Ti ii trough at 4100–4500 Å, the strong Ca ii features, and the early onset of the nebular phase. We observe that spectroscopic deviations of SN 1998de from SN 1991bg increase toward redder wavelengths. These deviations include the absence of the conspicuous Na i D absorption found in SN 1991bg at 5700 Å and the evolution of a region (6800–7600 Å) from featureless to feature‐rich. Several lines of evidence suggest that SN 1998de was a slightly more powerful explosion than SN 1991bg. We discuss the implications of our observations for progenitor models and the explosion mechanism of peculiar, subluminous SNe Ia. The extensive photometric data make SN 1998de a better template than SN 1991bg for calibrating the low‐luminosity end of the luminosity versus decline rate relationship.