The Pauli exclusion principle is one of the most fundamental manifestations of quantum statistics. Here, we report on its local observation in a spin-polarized degenerate gas of fermions in an optical lattice. We probe the gas with single-site resolution using a new generation quantum gas microscope avoiding the common problem of light induced losses. In the band insulating regime, we measure a strong local suppression of particle number fluctuations and a low local entropy per atom. Our work opens a new avenue for studying quantum correlations in fermionic quantum matter both in and out of equilibrium.