We formulate the locally supersymmetric E7(7) exceptional field theory in a (4 + 56|32) dimensional superspace, corresponding to a 4D
N= 8 external superspace augmented with an internal 56-dimensional space. This entails the unification of external diffeomorphisms and local supersymmetry transformations into superdiffeomorphisms. The solutions to the superspace Bianchi identities lead to on-shell duality equations for the p-form field strengths for p4. The reduction to component fields provides a complete description of the on-shell supersymmetric theory. As an application of our results, we perform a generalized Scherk-Schwarz reduction and obtain the superspace formulation of maximal gauged supergravity in four dimensions parametrized by an embedding tensor.