An asymmetry of optical emission lines that appeared in Sept. 1988 is interpreted as evidence of dust condensation within the metal-rich ejecta of SN 1987A. A quantitative analysis of this spectroscopic effect is given and shown to be compatible with the photometric record. Moreover, observational and theoretical estimates of the bolometric light curve come into agreement when the far-IR excess is interpreted as thermal emission by grains in the ejecta. A grain population comprising small silicate grains with an admixture of graphite or amorphous carbon particles is suggested by the data. The relevance of this discovery to suggestions that supernovae are major sources of interstellar dust is briefly discussed.