  We report the discovery of an X-ray counterpart to the southern radio hotspot
of the largest-known radio quasar 4C 74.26 (whose redshift is z=0.104). Both
XMM-Newton and Chandra images reveal the same significant (10arcsec, i.e.
19kpc) offset between the X-ray hotspot and the radio hotspot imaged with
MERLIN. The peak of the X-ray emission may be due to synchrotron or
inverse-Compton emission. If synchrotron emission, the hotspot represents the
site of particle acceleration and the offset arises from either the jet
exhibiting Scheuer's `dentist's drill' effect or a fast spine having less
momentum than the sheath surrounding it, which creates the radio hotspot. If
the emission arises from the inverse-Compton process, it must be
inverse-Compton scattering of the CMB in a decelerating relativistic flow,
implying that the jet is relativistic (Gamma >= 2) out to a distance of at
least 800kpc. Our analysis, including optical data from the Liverpool
Telescope, rules out a background AGN for the X-ray emission and confirms its
nature as a hotspot, making it the most X-ray luminous hotspot yet detected.
