jats:titleAbstract</jats:title> jats:pWe present the discovery of NGC253-SNFC-dw1, a new satellite galaxy in the remote stellar halo of the Sculptor Group spiral, NGC 253. The system was revealed using deep, resolved star photometry obtained as part of the Subaru Near-Field Cosmology Survey that uses the Hyper Suprime-Cam on the Subaru Telescope. Although rather luminous (jats:italicM</jats:italic> jats:sub jats:italicV</jats:italic> </jats:sub> = −11.7 ± 0.2) and massive (jats:italicM</jats:italic> jats:sub*</jats:sub> ∼ 1.25 × 10jats:sup7</jats:sup> jats:italicM</jats:italic> jats:sub⊙</jats:sub>), the system is one of the most diffuse satellites yet known, with a half-light radius of jats:italicR</jats:italic> jats:sub jats:italich</jats:italic> </jats:sub> = 3.37 ± 0.36 kpc and an average surface brightness of ∼30.1 mag arcminjats:sup−2</jats:sup> within the jats:italicR</jats:italic> jats:sub jats:italich</jats:italic> </jats:sub>. The color–magnitude diagram shows a dominant, old (∼10 Gyr), and metal-poor ([M/H] = −1.5 ± 0.1 dex) stellar population, as well as several candidate thermally pulsing asymptotic giant branch stars. The distribution of red giant branch stars is asymmetrical and displays two elongated tidal extensions pointing toward NGC 253, suggestive of a highly disrupted system being observed at apocenter. NGC253-SNFC-dw1 has a size comparable to that of the puzzling Local Group dwarfs Andromeda XIX and Antlia 2 but is 2 magnitudes brighter. While unambiguous evidence of tidal disruption in these systems has not yet been demonstrated, the morphology of NGC253-SNFC-dw1 clearly shows that this is a natural path to produce such diffuse and extended galaxies. The surprising discovery of this system in a previously well-searched region of the sky emphasizes the importance of surface-brightness limiting depth in satellite searches.</jats:p>