Long-duration gamma-ray bursts (GRBs) release copious amounts of energy across the entire electromagnetic spectrum, and so provide a window into the process of black hole formation from the collapse of massive stars. Previous early optical observations of even the most exceptional GRBs (990123 and 030329) lacked both the temporal resolution to probe the optical flash in detail and the accuracy needed to trace the transition from the prompt emission within the outflow to external shocks caused by interaction with the progenitor environment. Here we report observations of the extraordinarily bright prompt optical and gamma-ray emission of GRB 080319B that provide diagnostics within seconds of its formation, followed by broadband observations of the afterglow decay that continued for weeks. We show that the prompt emission stems from a single physical region, implying an extremely relativistic outflow that propagates within the narrow inner core of a two-component jet.