We present Hubble Space Telescope (HST) and ground-based observations of a pair of galaxies at redshift 2.38, which are collectively known as 2142-4420 B1 (Francis et al. 1996). The two galaxies are both luminous extremely red objects (EROs), separated by 0.8 arcsec. They are embedded within a 100 kpc scale diffuse Ly-alpha nebula (or blob) of luminosity ~10^44 erg/s. The radial profiles and colors of both red objects are most naturally explained if they are young elliptical galaxies: the most distant yet found. It is not, however, possible to rule out a model in which they are abnormally compact, extremely dusty starbursting disk galaxies. If they are elliptical galaxies, their stellar populations have inferred masses of ~10^11 solar masses and ages of ~7x10^8 years. Both galaxies have color gradients: their centers are significantly bluer than their outer regions. The surface brightness of both galaxies is roughly an order of magnitude greater than would be predicted by the Kormendy relation. A chain of diffuse star formation extending 1 arcsec from the galaxies may be evidence that they are interacting or merging. The Ly-alpha nebula surrounding the galaxies shows apparent velocity substructure of amplitude ~ 700 km/s. We propose that the Ly-alpha emission from this nebula may be produced by fast shocks, powered either by a galactic superwind or by the release of gravitational potential energy.