We analyze the free induction decay of nuclear spins under the influence of restricted diffusion in a magnetic dipole field around cylindrical objects. In contrast to previous publications no restrictions or simplifications concerning the diffusion process are made. By directly solving the Bloch-Torrey equation, analytical expressions for the magnetization are given in terms of an eigenfunction expansion. The field strength-dependent complex nature of the eigenvalue spectrum significantly influences the shape of the free induction decay. As the dipole field is the lowest order of the multipole expansion, the obtained results are important for understanding fundamental mechanisms of spin dephasing in many other applied fields of nuclear magnetic resonance such as biophysics or material science. The analytical methods are applied to interpret the spin dephasing in the free induction decay in cardiac muscle and skeletal muscle. A simple expression for the relevant transverse relaxation time is found in terms of the underlying microscopic parameters of the muscle tissue. The analytical results are in agreement with experimental data. These findings are important for the correct interpretation of magnetic resonance images for clinical diagnosis at all magnetic field strengths and therapy of cardiovascular diseases.