We are developing a stable and precise spectrograph for the Large Binocular Telescope (LBT) named "iLocater." The instrument comprises three principal components: a cross-dispersed echelle spectrograph that operates in the YJ-bands (0.97-1.30 μm), a fiber-injection acquisition camera system, and a wavelength calibration unit. iLocater will deliver high spectral resolution (R∼150,000-240,000) measurements that permit novel studies of stellar and substellar objects in the solar neighborhood including extrasolar planets. Unlike previous planet-finding instruments, which are seeing-limited, iLocater operates at the diffraction limit and uses single mode fibers to eliminate the effects of modal noise entirely. By receiving starlight from two 8.4m diameter telescopes that each use "extreme" adaptive optics (AO), iLocater shows promise to overcome the limitations that prevent existing instruments from generating sub-meter-per-second radial velocity (RV) precision. Although optimized for the characterization of low-mass planets using the Doppler technique, iLocater will also advance areas of research that involve crowded fields, line-blanketing, and weak absorption lines.