Optical images and spectroscopy are presented for the radio galaxy Hyd
ra A which contains a substantial flow of cooling X-ray gas. A young s
tellar population is observed as an excess light around the center sho
wing blue colour and Balmer lines in absorption. The same area also ex
hibits strong optical emission lines. Our IUE spectra show Ly alpha an
d an ultraviolet continuum. The optical luminosity and colour of the e
xcess light, the presence of Balmer absorption lines, and the UV conti
nuum flux are compatible with a burst of recent star formation of an a
ge approximate to 10(7) yr, total mass 10(8) - 10(9) M., and an initia
l mass function including OB stars. We argue that the young stars and
the emission-line gas most likely are products of the cooling flow. Th
is is apparently contradicted by the unexpected presence of a signific
ant amount of dust in Hydra A. The dust is inferred from a substantial
far-infrared flux which rivals the X-ray emission in cooling the hot
gas. We argue for the hypothesis that the dust is produced in connecti
on with star formation in the cooling flow.