  The first detected gravitational wave GW170817 from a binary neutron star
merger is associated with an important optical transient AT 2017gfo, which is a
direct observation of kilonova. Recent observations suggest that the remnant
compact object of the binary neutron star merger associated with GW170817/GRB
170817A may be a stable long-lived magnetized neutron star. In this situation,
there would be a pulsar wind nebula (PWN) embedded inside the dynamic ejecta.
The PWN emission may be absorbed by the ejecta or leak out of the system. We
study the effect of the PWN emission on the observed light curves and radiation
spectra. Different from previous works, the absorption and leakage of the PWN
emission are all involved in our model, where the absorption of the PWN
emission heats up the ejecta and alters its radiation. It is found that the
characteristic emission of the embedded PWN quickly evolves. For the multiband
and long-term observations of AT 2017gfo, we find that the dynamic ejecta with
a PWN emission can fit the observational data very well, especially for the
light curves at $t\sim 5$ days and those in the late phase. In addition, our
model can naturally generate the thermal to nonthermal spectrum evolution of AT
2017gfo. Our fitting result suggests that a PWN is embedded in the AT 2017gfo.
