We use 373 hours (≈15 days) of data from the second science run of the LIGO gravitational-wave detectors to search for signals from binary neutron star coalescences within a maximum distance of about 1.5 Mpc, a volume of space which includes the Andromeda Galaxy and other galaxies of the Local Group of galaxies. This analysis requires a signal to be found in data from detectors at the two LIGO sites, according to a set of coincidence criteria. The background (accidental coincidence rate) is determined from the data and is used to judge the significance of event candidates. No inspiral gravitational-wave events were identified in our search. Using a population model which includes the Local Group, we establish an upper limit of less than 47 inspiral events per year per Milky Way equivalent galaxy with 90% confidence for nonspinning binary neutron star systems with component masses between 1 and 3M⊙.