We report the first measurement of the $\tau$ lepton polarization $P_\tau(D^*)$ in the decay $\bar{B} \rightarrow D^* \tau^- \bar{\nu}_\tau$ as well as a new measurement of the ratio of the branching fractions $R(D^{*}) = \mathcal{B}(\bar {B} \rightarrow D^* \tau^- \bar{\nu}_\tau) / \mathcal{B}(\bar{B} \rightarrow D^* \ell^- \bar{\nu}_\ell)$, where $\ell^-$ denotes an electron or a muon, and the $\tau$ is reconstructed in the modes $\tau^- \rightarrow \pi^- \nu_\tau$ and $\tau^- \rightarrow \rho^- \nu_\tau$. We use the full data sample of $772 \times 10^6$ $B{\bar B}$ pairs recorded with the Belle detector at the KEKB electron-positron collider. Our results, $P_\tau(D^*) = -0.38 \pm 0.51 {\rm (stat.)} ^{+0.21}_{-0.16} {\rm (syst.)}$ and $R(D^*) = 0.270 \pm 0.035{\rm (stat.)} ^{+0.028}_{-0.025}{\rm (syst.)}$, are consistent with the theoretical predictions of the Standard Model.