  We report near-infrared and optical follow-up observations of the afterglow
of the Gamma-Ray Burst 000418 starting 2.5 days after the occurrence of the
burst and extending over nearly seven weeks. GRB 000418 represents the second
case for which the afterglow was initially identified by observations in the
near-infrared. During the first 10 days its R-band afterglow was well
characterized by a single power-law decay with a slope of 0.86. However, at
later times the temporal evolution of the afterglow flattens with respect to a
simple power-law decay. Attributing this to an underlying host galaxy we find
its magnitude to be R=23.9 and an intrinsic afterglow decay slope of 1.22. The
afterglow was very red with R-K=4 mag. The observations can be explained by an
adiabatic, spherical fireball solution and a heavy reddening due to dust
extinction in the host galaxy. This supports the picture that (long) bursts are
associated with events in star-forming regions.
