ABSTRACT We present multiband optical photometric and spectroscopic observations of an unusual Type II supernova, SN 2018hfm, which exploded in the nearby (d ≈ 34.67 Mpc) dwarf galaxy PGC 1297331 with a very low star formation rate (0.0270 M⊙ yr−1) and a subsolar metallicity environment (∼0.5 Z⊙). The V-band light curve of SN 2018hfm reaches a peak with value of −18.69 ± 0.64 mag, followed by a fast decline (4.42 ± 0.13 mag (100 d)−1). After about 50 d, it is found to experience a large flux drop (∼3.0 mag in V), and then enters into an unusually faint tail, which indicates a relatively small amount of 56Ni synthesized during the explosion. From the bolometric light curve, SN 2018hfm is estimated to have low ejecta mass (∼1.3 M⊙) and low explosion energy (∼1050 erg) compared with typical SNe II. The photospheric spectra of SN 2018hfm are similar to those of other SNe II, with P Cygni profiles of the Balmer series and metal lines, while at late phases the spectra are characterized by box-like profiles of H α emission, suggesting significant interaction between the SN ejecta and circumstellar matter. These box-like emission features are found to show increasing asymmetry with time, with the red-side component becoming gradually weaker, indicating that dust is continuously formed in the ejecta. Based on the dust-estimation tool damocles, we find that the dust increases from ∼10−6 M⊙ to 10−4–10−3 M⊙ between +66.7 d and +389.4 d after explosion.