In the presence of isotropic interactions, the Fermi surface of an ultracold Fermi gas is spherical. Introducing anisotropic interactions can deform the Fermi surface, but the effect is subtle and challenging to observe experimentally. Here, we report on the observation of a Fermi surface deformation in a degenerate dipolar Fermi gas of erbium atoms. The deformation is caused by the interplay between strong magnetic dipole-dipole interaction and the Pauli exclusion principle. We demonstrate the many-body nature of the effect and its tunability with the Fermi energy. Our observation provides a basis for future studies on anisotropic many-body phenomena in normal and superfluid phases.