We report the observation of the flavor-changing neutral current process b→dγ using a sample of 386×106 B meson pairs accumulated by the Belle detector at the KEKB e+e- collider. We measure branching fractions for the exclusive modes B-→ρ-γ, B̄0→ρ0γ, and B̄0→ωγ. Assuming that these three modes are related by isospin, we find B(B̄→(ρ,ω)γ)=(1.32-0.31+0.34(stat)-0.09+0.10(syst)) ×10-6 with a significance of 5.1σ. This result is used to determine the ratio of Cabibbo-Kobayashi-Maskawa matrix elements |Vtd/Vts| to be 0.199-0.025+0.026(exp)-0.015+0.018(theor). © 2006 The American Physical Society.