We report on strong van der Waals blockade in two-photon Rydberg excitation of ultracold magnetically trapped 87Rb atoms. The excitation dynamics was investigated for a large range of densities and laser intensities and shows a full saturation and a strong suppression with respect to single-atom behavior. The observed scaling of the initial increase with density and laser intensity provides evidence for coherent collective excitation. This coherent collective behavior, that was observed for up to several thousand atoms per blockade volume, is generic for all mesoscopic systems which are able to carry only one single quantum of excitation.