We report observations of GRB 050525A, for which a Gemini North spectrum shows its redshift to be z=0.606. This is the third closest long GRB discovered by Swift. We observed its afterglow using the VLT, Gemini, and TNG telescopes to search for an associated supernova. We find that the early-time light curve is described by a broken power law with a break at tåisebox-0.5ex 0.3 days after the burst. About 5 days after the burst, a flattening is apparent, followed by a further dimming. Both the magnitude and the shape of the light curve suggest that a supernova was emerging during the late decay of the afterglow. This supernova, named SN 2005nc, had a rise time faster than SN 1998bw and a long-lasting maximum. A spectrum obtained about 20 days (rest frame) after the GRB resembles the spectrum of SN 1998bw obtained close to maximum light.