Dissipation is ubiquitous in nature and plays a crucial role in quantum systems such as causing decoherence of quantum states. Recently, much attention has been paid to an intriguing possibility of dissipation as an efficient tool for the preparation and manipulation of quantum states. We report the realization of successful demonstration of a novel role of dissipation in a quantum phase transition using cold atoms. We realize an engineered dissipative Bose-Hubbard system by introducing a controllable strength of two-body inelastic collision via photoassociation for ultracold bosons in a three-dimensional optical lattice. In the dynamics subjected to a slow ramp-down of the optical lattice, we find that strong on-site dissipation favors the Mott insulating state: The melting of the Mott insulator is delayed, and the growth of the phase coherence is suppressed. The controllability of the dissipation is highlighted by quenching the dissipation, providing a novel method for investigating a quantum many-body state and its nonequilibrium dynamics.