We experimentally study the influence of dissipation on the driven Dicke quantum phase transition, realized by coupling external degrees of freedom of a Bose–Einstein condensate to the light field of a high-finesse optical cavity. The cavity provides a natural dissipation channel, which gives rise to vacuum-induced fluctuations and allows us to observe density fluctuations of the gas in real-time. We monitor the divergence of these fluctuations over two orders of magnitude while approaching the phase transition, and observe a behavior that deviates significantly from that expected for a closed system. A correlation analysis of the fluctuations reveals the diverging time scale of the atomic dynamics and allows us to extract a damping rate for the external degree of freedom of the atoms. We find good agreement with our theoretical model including dissipation via both the cavity field and the atomic field. Using a dissipation channel to nondestructively gain information about a quantum many-body system provides a unique path to study the physics of driven-dissipative systems.