  We present contemporaneous optical and infrared photometric observations of
the type IIn SN 1998S covering the period between 11 and 146 days after
discovery. The infrared data constitute the first ever infrared light curves of
a type IIn supernova. We use blackbody and spline fits to the photometry to
examine the luminosity evolution. During the first 2--3 months, the luminosity
is dominated by the release of shock-deposited energy in the ejecta. After
$\sim$100 days the luminosity is powered mostly by the deposition of
radioactive decay energy from 0.15$\pm$0.05 M$_{\odot}$ of $^{56}$Ni which was
produced in the explosion. We also report the discovery of an astonishingly
high infrared (IR) excess, $K-L'=2.5$, that was present at day 130. We
interpret this as being due to thermal emission from dust grains in the
vicinity of the supernova. We argue that to produce such a high IR luminosity
so soon after the explosion, the dust must be {\it pre-existing} and so is
located in the circumstellar medium of the progenitor. The dust could be heated
either by the UV/optical flash (IR echo) or by the X-rays from the interaction
of the ejecta with the circumstellar material
