The band line-up and the chemical interaction at the CdTe/NbSe2 interface were investigated with photoemission spectroscopy. NbSe2 is a layered metal dichalcogenide with metallic properties and a large work function. This makes it a potential candidate as back contact material for CdTe thin film solar cells. The interface was investigated by stepwise in situ deposition of NbSe2 and subsequent characterization with x-ray and ultraviolet photoemission spectroscopy. The experiments showed that Te and Se interdiffuse at the interface, causing the formation of a graded diffusion layer. The resulting band alignment indicates the formation of an interface dipole leading to a midband gap alignment of the NbSe2 Fermi level.