At a redshift of 0.18, Abell 1689 is so far the most distant cluster of galaxies for which substantial mid-infrared (MIR) data have been published. Its mapping with the ISOCAM camera onboard the ISO satellite allowed the detection of 30 cluster members at 6.75 micron (LW2 filter) and 16 cluster members at 15 micron (LW3 filter) within a clustercentric radius of 0.5 Mpc citep[][ Paper I]{Fadda00b}. We present here the follow-up optical photometric and spectroscopic observations which were used to study the individual properties of the galaxy members of A1689. We confirm the high fraction of blue galaxies initially reported in this rich cluster by citet{Butcher84}, that was challenged by some subsequent studies. We discuss the spectral and morphological properties of all cluster members in our spectroscopic sample, and of the MIR-detected galaxies in particular. Sources with a low [15 micron]/[6.75 micron] flux ratio typically consist of luminous passive early-type galaxies while those with a high MIR color index are mainly luminous, blue, emission-line, morphologically disturbed spirals, i.e. the star-forming galaxies usually associated with the ``Butcher-Oemler'' effect. On the other hand, at least 30% of the 15 micron sources have optical counterparts showing no evidence for current star-formation activity, while their 15 micron emission is most likely due to obscured star formation. We argue that the LW3 luminosity measured in the cluster members is a reliable tracer of the total infrared luminosity which in A1689 galaxies peaks at Lir = 6.2 x 1010 Lo . We derive from Lir a star-formation rate free of dust extinction, SFR(IR), which we compare with that determined in the optical from the flux of the OIIt emission line, SFR(opt). The highest total star formation rates (11 usfr) and dust extinction are measured in those galaxies exhibiting in their optical spectrum a signature of a dusty starburst. In contrast, none of the galaxies with post-starburst optical spectra has been detected by ISOCAM down to a 15 micron flux limit corresponding to 1.4 usfr. We find a median SFR(IR) of the LW3-detected galaxies of 2 usfr that is ten times higher than the median SFR(opt) of the OIIt- detected galaxies. The ratio SFR(IR)/SFR(opt) is in fact very high, ranging between 10 and 100 for LW3-detected galaxies with OIIt emission. We conclude that a major part, at least 90%, of the star formation activity taking place in Abell 1689 is hidden. Whether the high extinction measured in the star-forming cluster members results from the cluster environment itself or reflects a comparable extinction in the coeval field is still unclear. Based on observations collected at the European Southern Observatory, La Silla, Chile (ESO No. 61.A-0619).