Borexino is an experiment for low-energy neutrino spectroscopy at the Gran Sasso underground laboratories. It is designed to measure the monoenergetic {sup 7}Be solar neutrino flux in real time, via neutrino-electron elastic scattering in an ultrapure organic liquid scintillator. Borexino has the potential to also detect neutrinos from the pep fusion process and the CNO cycle. For this measurement to be possible, radioactive contamination in the detector must be kept extremely low. Once sufficiently clean conditions are met, the main background source is {sup 11}C, produced in reactions induced by the residual cosmic muon flux on {sup 12}C. In the process, a free neutron is almost always produced. {sup 11}C can be tagged on an event-by-event basis by looking at the threefold coincidence with the parent muon track and the subsequent neutron capture on protons. This coincidence method has been implemented on the Borexino Counting Test Facility data. We report on the first event-by-event identification of in situ muon-induced {sup 11}C in a large underground scintillator detector. We measure a {sup 11}C production rate of 0.130 {+-} 0.026(stat) {+-} 0.014(syst) day{sup -1} ton{sup -1}, in agreement with predictions from both experimental studies performed with a muon beam on a scintillator target and ab initio estimations based on the {sup 11}C producing nuclear reactions.