The transverse-field XY model in one dimension is a well-known spin model for which the ground state properties and excitation spectrum are known exactly. The model has an interesting phase diagram describing quantum phase transitions (QPTs) belonging to two different universality classes. These are the transverse-field Ising model and the XX model universality classes with both the models being special cases of the transverse-field XY model. In recent years, quantities related to quantum information theoretic measures like entanglement, quantum discord (QD) and fidelity have been shown to provide signatures of QPTs. Another interesting issue is that of decoherence to which a quantum system is subjected due to its interaction, represented by a quantum channel, with an environment. In this paper, we determine the dynamics of different types of correlations present in a quantum system, namely, the mutual information I (ρAB), the classical correlations C (ρAB) and the quantum correlations Q(ρAB), as measured by the quantum discord, in a two-qubit state. The density matrix of this state is given by the nearest-neighbour reduced density matrix obtained from the ground state of the transverse-field XY model in 1d. We assume Markovian dynamics for the time-evolution due to system-environment interactions. The quantum channels considered include the bit-flip, bit-phase-flip and phase-flip channels. Two different types of dynamics are identified for the channels in one of which the quantum correlations are greater in magnitude than the classical correlations in a finite time interval. The origins of the different types of dynamics are further explained. For the different channels, appropriate quantities associated with the dynamics of the correlations are identified which provide signatures of QPTs. We also report results for further-neighbour two-qubit states and finite temperatures. © 2012 EDP Sciences, Società Italiana di Fisica, Springer-Verlag.