@Reche

I have a little bit of bad news for you hun - this is going to end in a broken heart however you go about it I'm afraid. How old is the guy in question? Do you think he'll react maturely to being turned down?

I shouldn't worry too much about the rest of the gaming group - I'm fairly sure that they will still like you no matter how the DM reacts because this is purely between you and him.

It's almost certain that he's going to be very gloomy for a while afterwards - kind of unavoidable. My advice for you is to be absolutely clear that nothing will ever happen between you. If you try and let him down gently he probably won't take the hint. Something along the lines of "I believe you are looking for something more than just friendship from me. I'm sorry but I do not have any interest in taking our relationship further than it currently stands."

Give him some space for a day or two afterwards and then see if you can approach him as a friend again. Good luck.