We present BeppoSAX follow-up observations of GRB980425 obtained with the Narrow Field Instruments (NFI) in April, May, and November 1998. The first NFI observation has detected within the 8 radius error box of the GRB an X-ray source positionally consistent with the supernova 1998bw, which exploded within a day of GRB980425, and a fainter X-ray source, not consistent with the position of the supernova. The former source is detected in the following NFI pointings and exhibits a decline of a factor of two in six months. If it is associated with SN 1998bw, this is the first detection of X-ray emission from a Type I supernova above 2 keV. The latter source exhibits only marginally significant variability. The X-ray spectra and variability of the supernova are compared with thermal and non-thermal models of supernova high energy emission. Based on the BeppoSAX data, it is not possible to firmly establish which of the two detected sources is the GRB X-ray counterpart, although probability considerations favor the supernova.