  The guest star of AD 1181 is the only historical supernova of the last
millennium that is without a definite counterpart. The previously proposed
association with supernova remnant 3C58 is in strong doubt because of the
inferred age of this remnant. Here we report a new identification of SN 1181
with our codiscovery of the hottest known Wolf Rayet star of the Oxygen
sequence (dubbed Parkers star) and its surrounding nebula Pa 30. Our
spectroscopy of the nebula shows a fast shock with extreme velocities of
approx. 1,100kms. The derived expansion age of the nebula implies an explosive
event approx 1,000 years ago which agrees with the 1181 AD event. The on sky
location also fits the historical Chinese and Japanese reports of SN 1181 to
3.5degrees. Pa 30 and Parkers star have previously been proposed to be the
result of a double-degenerate merger, leading to a rare Type Iax supernova. The
likely historical magnitude and the distance suggest the event was subluminous
for normal supernova. This agrees with the proposed Type Iax association which
would also be the first of its kind in the Galaxy. Taken together, the age,
location, event magnitude and duration elevate Pa 30 to prime position as the
counterpart of SN 1181. This source is the only Type Iax supernova where
detailed studies of the remnant star and nebula are possible. It provides
strong observational support for the double degenerate merger scenario for Type
Iax supernovae.
