Go to File > Settings > Gradle you will end up with this screen for setting up your gradle :

Also make sure you have Google Repository in your Android SDK directory which will be located at :

$SDK_DIR\extras\google\m2repository\com\google\android\gms\play-services\3.1.36

If not do install it from SDK Manager > Extras > Google Repository first.

EDIT :

All your build.gradle(If you are using root level build.gradle to define android gradle plugin version, check in that only) must point to 0.8 version(latest as of now) of android gradle plugin

dependencies { classpath ‘com.android.tools.build:gradle:0.8.+‘ }

UPDATED :

Mapping is :

| Android Gradle Plugin | Gradle Version | 0.7.+ 1.9 0.8.+ 1.10

Gradle project sync failed.