We prove the theorem of linearized asymptotic stability for fractional differential equations. More precisely, we show that an equilibrium of a nonlinear Caputo fractional differential equation is asymptotically stable if its linearization at the equilibrium is asymptotically stable. As a consequence we extend Lyapunov’s first method to fractional differential equations by proving that if the spectrum of the linearization is contained in the sector {λ ∈ ₵:ǀarg(λ)ǀ > απ/2} where α > 0 denotes the order of the fractional differential equation, then the equilibrium of the nonlinear fractional differential equation is asymptotically stable.