We present observations of M31LRN 2015 (MASTER OT J004207.99+405501.1), discovered in M31 in 2015 January, and identified as a rare and enigmatic luminous red nova (LRN). Spectroscopic and photometric observations obtained by the Liverpool Telescope showed the LRN becoming extremely red as it faded from its {{M}V}=-9.4+/- 0.2 peak. Early spectra showed strong Hα emission that weakened over time as a number of absorption features appeared, including Na i D and Ba ii. At later times strong TiO absorption bands were also seen. A search of archival Hubble Space Telescope data revealed a luminous red source to be the likely progenitor system, with pre-outburst Hα emission also detected in ground-based data. The outburst of M31LRN 2015 shows many similarities, both spectroscopically and photometrically, with that of V838 Mon, the best studied LRN. We finally discuss the possible progenitor scenarios.