Observations of SN1987A in the spectral range 18-35 microns taken on November 16 and 23, 1988, 632 and 639 days after core collapse, are reported. A strong and rather flat continuum underlies weak fine-structure lines from heavy elements and declines slowly between 24 and 30 microns. The spectral shape indicates thermal emission from an almost featureless dust component, probably graphite, with silicates contributing less than 20 percent of the emitting dust mass. Some of the emission may be an 'echo' of supernova light reflected from a preexisting dust cloud, but a better explanation which can account for the entirety of emission from infrared to gamma wavelengths, is that dust is being formed in the supernova ejecta. This also accounts more naturally for the inferred dust composition.