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This historic event has been achieved onboard Ф-sat-1, the European Space Agency’s (ESA) Artificial Intelligence (AI) demonstration cubesat that was launched on a Vega rocket on September 3rd. Initial data downlinked from the satellite today has shown that the AI-powered automatic cloud detection algorithm has correctly sorted hyperspectral Earth Observation (EO) imagery from the satellite’s sensor into cloudy and non-cloudy data. Ф-sat-1 is part of an ambitious and ground-breaking programme, funded by ESA, for the demonstration and validation of state-of-the-art Deep Learning technology applied in-orbit for autonomously processing Earth Observation data. Today’s successful application of the Ubotica CVAI™ Artificial Intelligence technology, developed with ESA GSTP, which is powered by the Intel Movidius Myriad 2 Vision Processing Unit, has demonstrated real on-board data processing autonomy, laying a foundation stone for the path to advanced Deep Learning applied to satellite data at source. Decision making on-board Ф-sat-1, rather than on the ground, has been shown to enable pre-filtering of EO data so that only relevant images with usable information are downlinked to the ground, thereby improving bandwidth utilisation and significantly reducing aggregated downlink costs.