The oxygen-bearing species C3O has been identified in the circumstellar envelope of the carbon star IRC +10216. The J = 8-->7, 9-->8, 10-->9, 14-->13, and 15-->14 transitions were detected at 2 and 3 mm using the Arizona Radio Observatory’s 12 m telescope. Measurements of the J = 9-->8, 10-->9, and 12-->11 lines were simultaneously conducted at the IRAM 30 m telescope. The line profiles of C3O are roughly U-shaped, indicating an extended shell distribution for this molecule in IRC +10216. The total column density derived for C3O is 1.2x10^12 cm^-2, at least an order of magnitude higher than that predicted by current chemical models. However, a revised model that includes reactions of atomic oxygen with carbon-chain radicals, such as l-C3H and C4, can reproduce the observed abundance. This model also predicts that C3O arises from a shell source with an outer radius near r ∼ 30", consistent with the observations. These results suggest that gas phase neutral-neutral chemistry may be producing the oxygen-bearing molecules present in the outer envelope of IRC +10216.This material is based on work supported by the National Aeronautics and Space Administration through the NASA Astrobiology Institute under Cooperative Agreement CAN-02-OSS-02 issued through the Office of Space Science. We also acknowledge support from Spanish MEC under project AYA2003-2785 and from "Comunidad de Madrid" under PRICIT project S-0505/ESP-0237 (ASTROCAM). E. D. T. thanks NSF for a graduate research fellowship, and M. A. acknowledges Spanish MEC for a predoctoral grant AP2003-4619.Peer reviewed