Gibbs' Paradox is shown to arise from an incorrect traditional definition of the entropy that has unfortunately become entrenched in physics textbooks. Among its flaws, the traditional definition predicts a violation of the second law of thermodynamics when applied to colloids. By adopting Boltzmann's definition of the entropy, the violation of the second law is eliminated, the properties of colloids are correctly predicted, and Gibbs' Paradox vanishes.