  We report the first observation of the flavor-changing neutral current decay
$B \to K^* \ell^+ \ell^-$ and an improved measurement of the decay $B \to K
\ell^+ \ell^-$, where $\ell$ represents an electron or a muon, with a data
sample of 140 fb${}^{-1}$ accumulated at the $\Upsilon(4S)$ resonance with the
Belle detector at KEKB. The results for the branching fractions are ${\cal B}(B
\to K^* \ell^+ \ell^-)=(11.5^{+2.6}_{-2.4} \pm 0.8 \pm 0.2) \times 10^{-7}$ and
${\cal B}(B \to K \ell^+ \ell^-)=(4.8^{+1.0}_{-0.9} \pm 0.3 \pm 0.1) \times
10^{-7}$, where the first error is statistical, the second is systematic and
the third is from model dependence.
