© 2017. The American Astronomical Society. All rights reserved. We show the combined spectral analysis of Chandra high-energy transmission grating and XMM-Newton reflection-grating spectrometer observations of the broad-line radio galaxy 3C 111. This source is known to show excess neutral absorption with respect to the one estimated from 21 cm radio surveys of atomic H i in the Galaxy. However, previous works were not able to constrain the origin of such an absorber as local to our Milky Way or intrinsic to the source (z = 0.0485). The high signal-to-noise grating spectra allow us to constrain the excess absorption as being due to intervening gas in the Milky Way, and we estimate a time-averaged total column density of NH = (7.4 ± 0.1) × 1021 cm-2, a factor of two higher than the tabulated H i value. We recommend using the total average Galactic column density estimated here when studying 3C 111. The origin of the extra Galactic absorption of NH = 4.4 × 1021 cm-2 is likely due to molecular gas associated with the Taurus molecular cloud complex toward 3C 111, which is our nearest star-forming region. We also detect a weak (EW = 16 ± 10 eV) and narrow (FWMH < 5500 km s-1, consistent with optical Hα) Fe Kα emission line at E = 6.4 keV, likely from the torus in the central regions of 3C 111, and we place an upper limit on the column density of a possible intrinsic warm absorber of N H < 2.5 ×1020 cm-2. These complexities make 3C 111 a very promising object for studying both the intrinsic properties of this active radio galaxy and the Galactic interstellar medium, if used as a background source.