The reliable detection of single quantum particles has revolutionized the field of quantum optics and quantum information processing. For several years, researchers have aspired to extend such detection possibilities to larger scale strongly correlated quantum systems, in order to record in-situ images of a quantum fluid in which each underlying quantum particle is detected. Here we report on fluorescence imaging of strongly interacting bosonic Mott insulators in an optical lattice with single-atom and single-site resolution. From our images, we fully reconstruct the atom distribution on the lattice and identify individual excitations with high fidelity. A comparison of the radial density and variance distributions with theory provides a precise in-situ temperature and entropy measurement from single images. We observe Mott-insulating plateaus with near zero entropy and clearly resolve the high entropy rings separating them although their width is of the order of only a single lattice site. Furthermore, we show how a Mott insulator melts for increasing temperatures due to a proliferation of local defects. Our experiments open a new avenue for the manipulation and analysis of strongly interacting quantum gases on a lattice, as well as for quantum information processing with ultracold atoms. Using the high spatial resolution, it is now possible to directly address individual lattice sites. One could, e.g., introduce local perturbations or access regions of high entropy, a crucial requirement for the implementation of novel cooling schemes for atoms on a lattice.