Using a vector vortex coronagraph behind the 1.5 m well-corrected subaperture (WCS) at Palomar, we detected a second object very close to epsilon Cephei, a delta Scuti F0 IV star. The candidate companion, similar to 50 times fainter than epsilon Cephei, if physically associated, is a late-type K or early M star, and lies at an angular separation of 330 mas, or 1.1 lambda/D for the WCS, making it the smallest angle detection ever realized with a coronagraph in terms of lambda/D units. The projected separation of the putative companion is similar to 8.6 AU, most likely on a highly eccentric orbit. The recently detected near-infrared excess is thus likely not due to hot dust. Moreover, we also show that the previously reported IRAS 60 mu m excess was due to source confusion on the galactic plane.