Android Studio: Plugin with id 'android-library' not found

Question

Instruct Gradle to download Android plugin from Maven Central repository.

You do it by pasting the following code at the beginning of the Gradle build file:

buildscript {
    repositories {
        mavenCentral()
    }
    dependencies {
        classpath 'com.android.tools.build:gradle:1.1.1'
    }
}

Replace version string 1.0.+ with the latest version. Released versions of Gradle plugin can be found in official Maven Repository or on MVNRepository artifact search.

Just for the record (took me quite a while) before Grzegorzs answer worked for me I had to install "android support repository" through the SDK Manager!

Install it and add the following code above apply plugin: 'android-library' in the build.gradle of actionbarsherlock folder!

buildscript {
    repositories {
        mavenCentral()
    }
    dependencies {
        classpath 'com.android.tools.build:gradle:1.0.+'
    }
}

Use

apply plugin: 'com.android.library'

to convert an app module to a library module. More info here: https://developer.android.com/studio/projects/android-library.html

In later versions, the plugin has changed name to:

apply plugin: 'com.android.library'

And as already mentioned by some of the other answers, you need the gradle tools in order to use it. Using 3.0.1, you have to use the google repo, not mavenCentral or jcenter:

buildscript {
    repositories {
        ...
        //In IntelliJ or older versions of Android Studio
        //maven {
        //   url 'https://maven.google.com'
        //}
        google()//in newer versions of Android Studio
    }
    dependencies {
        classpath 'com.android.tools.build:gradle:3.0.1'
    }
}