We investigate the population of cool, evolved stars in the Local Group dwarf elliptical galaxy M32, using Infrared Array Camera observations from the Spitzer Space Telescope. We construct deep mid-infrared colour-magnitude diagrams for the resolved stellar populations within 3.5 arcmin of M32's centre, and identify those stars that exhibit infrared excess. Our data are dominated by a population of luminous, dust-producing stars on the asymptotic giant branch (AGB) and extend to approximately 3 mag below the AGB tip. We detect for the first time a sizeable population of `extreme' AGB stars, highly enshrouded by circumstellar dust and likely completely obscured at optical wavelengths. The total dust-injection rate from the extreme AGB candidates is measured to be 7.5x10^-7^M_{sun}_/yr, corresponding to a gas mass-loss rate of 1.5x10^-4^M_{sun}_/yr. These extreme stars may be indicative of an extended star formation epoch between 0.2 and 5Gyr ago.