The Red Rectangle(1) is the prototype of a class of carbon-rich reflection nebulae surrounding low-mass stars in the final stages of evolution. The central star of this nebula has ejected most of its layers (during the red-giant phase), which now form the surrounding cloud, and is rapidly evolving to a white dwarf. This star is also a member of a wide binary system(2), which is surrounded by a thick, dusty disk of material(3,4). Here we report infrared observations of the Red Rectangle that reveal the presence of oxygen-rich material: prominent emission bands from crystalline silicates, and absorption lines arising from carbon dioxide. The oxygen-rich material is located in the circumbinary disk, in contrast to the previously known carbon-rich dust, which is found mainly in the extended nebula(5'6). The properties of the oxygen-rich dust are similar to those of dusty disks surrounding young stars(7), which are believed to be the sites of planet formation. Grain processing, and perhaps even planet formation, may therefore also be occurring in the circumbinary disk of this evolved star.