We present the discovery and high signal-to-noise spectroscopic observations of the optical afterglow of the long-duration gamma-ray burst GRB 070125. Unlike all previously observed long-duration afterglows in the redshift range 0.5≲z≲2.0, we find no strong (rest-frame equivalent width W r≳1.0Å) absorption features in the wavelength range 4000-10000 Å. The sole significant feature is a weak doublet that we identify as Mg II λλ 2796 (Wr=0.18±0.02Å), 2803 (Wr=0.08±0.01Å) at z=1.5477±0.0001. The low observed Mg II and inferred H I column densities are typically observed in galactic halos, far away from the bulk of massive star formation. Deep ground-based imaging reveals no host directly underneath the afterglow to a limit of R>25.4mag. Either of the two nearest blue galaxies could host GRB 070125; the large offset (d≥27kpc) would naturally explain the low column densities. To remain consistent with the large local (i.e. parsec scale) circum-burst density inferred from broadband afterglow observations, we speculate GRB 070125 may have occurred far away from the disk of its host in a compact star-forming cluster. Such distant stellar clusters, typically formed by dynamical galaxy interactions, have been observed in the nearby universe, and should be more prevalent at z>1 where galaxy mergers occur more frequently.