The first results of a new approach to ground-based stellar coronagraphy are reported. A coronagraph has been equipped with an image-motion compensation system for the stabilization of the telescope field, permitting both improved image resolution and contrast at optical wavelengths. By stopping the telescope aperture D to ~ 4 r(0), where r(0) is Fried's parameter, the maximum attainable resolution gain factor of 2.2 was achieved. Gains measured for D/r(0) > 14 were below the theoretical value of 1.3 theory and were indicative of centroid anisoplanatism, a small spatial coherence outer scale, or both. These effects are also evidenced by diminished power at low frequencies in the power spectrum of image motion over the full telescope aperture. A comparison of stabilized and unstabilized images shows that this coronagraph may detect circumstellar objects 2 magnitudes fainter than those detectable with a conventional coronagraph.