We present initial results from ``Via Lactea'', the highest resolution simulation to date of Galactic CDM substructure. It follows the formation of a Milky Way-size halo with Mvir=1.8x10^12 Msun in a WMAP 3-year cosmology, using 234 million particles. Over 10,000 subhalos can be identified at z=0: Their cumulative mass function is well-fit by N(>Msub)= 0.0064 (Msub/Mvir)^(-1) down to Msun=4x10^6 Msun. The total mass fraction in subhalos is 5.3%, while the fraction of surface mass density in substructure within a projected distance of 10 kpc from the halo center is 0.3%. Because of the significant contribution from the smallest resolved subhalos, these fractions have not converged yet. Sub-substructure is apparent in all the larger satellites, and a few dark matter lumps are resolved even in the solar vicinity. The number of dark satellites with peak circular velocities above 10 km/s (5 km/s) is 124 (812): of these, 5 (26) are found within 0.1 Rvir, a region that appeared practically smooth in previous simulations. The neutralino self-annihilation gamma-ray emission from dark matter clumps is approximately constant per subhalo mass decade. Therefore, while in our run the contribution of substructure to the gamma-ray luminosity of the Galactic halo amounts to only 40% of the total spherically-averaged smooth signal, we expect this fraction to grow significantly as resolution is increased further. An all-sky map of the expected annihilation gamma-ray flux reaching a fiducial observer at 8 kpc from the Galactic center shows that at the current resolution a small number of subhalos start to be bright enough to be visible against the background from the smooth density field surrounding the observer.

15 pages, 10 figures. ApJ accepted. Movies, images and a version with higher resolution figures are available at http://www.ucolick.org/~diemand/vl/