The U.S. Naval Observatory Astrometric Optical Interferometer (AOI) began operation on Anderson Mesa, near Flagstaff, Arizona, in the autumn of 1994. The AOI incorporates four siderostats that are located in a Y-shaped configuration, and features a full-array laser metrology system to monitor baseline motion. The AOI incorporates state-of-the-art delay lines and a real-time fringe-tracking system. The AOI will have a limiting visual magnitude of 10, under typical observing conditions, and will produce star positions accurate to a few milliarcseconds (mas). With a planned operational lifetime of several decades, this instrument will be capable of maintaining the optical reference frame by improving the proper motions of thousands of the brighter HIPPARCOS stars through repeated observations.