We report the discovery of a new dwarf spheroidal galaxy near M31 on the basis of INT/WFC imaging. The system, Andromeda XVII (And XVII), is located at a projected radius of ~44 kpc from M31, has a line-of-sight distance of 794+/-40 kpc measured using the tip of the red giant branch, and therefore lies well within the halo of M31. The color of the red giant branch implies a metallicity of [Fe/H]~-1.9, and we find an absolute magnitude of MV~-8.5. Three globular clusters lie near the main body of And XVII, suggesting a possible association; if any of these are confirmed, it would make And XVII exceptionally unusual among the faint dSph population. The projected position on the sky of And XVII strengthens an intriguing alignment apparent in the satellite system of M31, although with a caveat about biases stemming from the current area surveyed to significant depth.