Routine Faraday rotation observations of the VHF signal from the geostationary satellite ATS 3 made at Sagamore Hill (Massachusetts) revealed that an unusually large and rapid decay in the ionospheric total electron content (TEC) occurred near 1240 EST on May 14, 1973. The disturbance appeared as a dramatic 'bite-out' of substantial magnitude (?50%) and duration (of the order of hours) in the expected diurnal TEC curve for that day. Observations from other sites revealed that a 'hole' in the ionospheric F region was created over a region approximately 1000 km in radius. The onset of the TEC disturbance occurred within 10 min of the launch of NASA's Skylab workshop by a Saturn 5 rocket. As the rocket moved at F region heigthts, the burning second-stage engines passed within 150 km of the Sagamore Hill ray path to ATS 3. A detailed analysis of the aeronomic reactions initiated by the constituents of the exhaust field revealed that the F2 region plasma experienced a devastating loss process as the plume expanded. The specific mechanism involved was the rapid ion-atom interchange reactions between the ionospheric O+ and the hydrogen and water vapor molecules in the plume, followed by dissociative recombination of the molecular ions. Model calculations of the diffusion of the plume in the ionosphere and its effect upon continuity equation calculations for TEC showed an excellent agreement with the observed onset and magnitude of the effect. The phenomenon has interesting astrophysical and geophysical implications.