The transverse Ising Model (TIM) in one dimension is the simplest model which exhibits a quantum phase transition (QPT). Quantities related to quantum information theoretic measures like entanglement, quantum discord (QD) and fidelity are known to provide signatures of QPTs. The issue is less well explored when the quantum system is subjected to decoherence due to its interaction, represented by a quantum channel, with an environment. In this paper we study the dynamics of the mutual information I(ρ AB ), the classical correlations C(ρ AB ) and the quantum correlations Q(ρ AB ), as measured by the QD, in a two-qubit state the density matrix of which is the reduced density matrix obtained from the ground state of the TIM in 1d. The time evolution brought about by system-environment interactions is assumed to be Markovian in nature and the quantum channels considered are amplitude damping, bit-flip, phase-flip and bit-phase-flip. Each quantum channel is shown to be distinguished by a specific type of dynamics. In the case of the phase-flip channel, there is a finite time interval in which the quantum correlations are larger in magnitude than the classical correlations. For this channel as well as the bit-phase-flip channel, appropriate quantities associated with the dynamics of the correlations can be derived which signal the occurrence of a QPT. © 2012 EDP Sciences, SIF, Springer-Verlag Berlin Heidelberg.