The Fano effect, which arises from an interference between a localized state and the continuum, represents one of the most fundamental aspects of quantum mechanics as observed in many physical systems. We have realized a tunable Fano system in a quantum dot (QD) in an Aharonov-Bohm interferometer, which is the first convincing demonstration of this effect in mesoscopic systems. With the aid of the continuum, the localized state inside the QD acquires itinerancy even in the Coulomb blockade. By tuning the system in several ways, its unique properties on the phase and coherence of electrons have been revealed.