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.driven-dissipative phase transitions | critical behavior | Dicke model | quantum gas | cavity QED E xperimental progress in the creation, manipulation, and probing of atomic quantum gases has made it possible to study highly controlled many-body systems and to access their phase transitions. This unique approach to quantum many-body physics has substantiated the notion of quantum simulation for key models of condensed matter physics (1, 2). There has been increasing interest in generalizing such an approach to nonequilibrium zero-temperature or quantum phase transitions in driven-dissipative systems (3), as occurring in condensed matter systems coupled to light (4,5) or in open electronic systems (6, 7). Among the most tantalizing questions is how vacuum fluctuations from the environment influence the critical behavior at a phase transition via quantum backaction. Related to this question is whether driven-dissipative phase transitions give rise to new universal behavior, and under which conditions they exhibit classical critical behavior with an effective temperature (8-12).Coupling quantum gases to the field of an optical cavity is a particularly promising approach to realize a driven-dissipative quantum many-body system with a well-understood and controlled dissipation channel. A further advantage of this scheme is that the dissipation channel of the cavity mode can be directly used to investigate the system in a nondestructive way via the leaking cavity field (13). Combining the experimental setting of cavity quantum electrodynamics with that of quantum gases (14-18) led to the observation of quantum backaction heating caused by cavity dissipation (19,20), as well as to the realization of the nonequilibrium Dicke quantum phase transition (21). Here, we study the influence of cavity dissipation on the fluctuation spectrum at the Dicke phase transition by connecting these approaches. We nondestructively observe diverging fluctuations of the o...