We report direct visualizations of the fluctuation and condensation phenomena in a phase transition of a one-dimensional (1D) In/Si(111) system using scanning tunneling microscopy. The high-temperature (HT) and low-temperature (LT) phases are found to coexist on the nanometer scale near Tc. Above Tc, 1D LT-phase stripes fluctuate in the HT phase and coalesce into 2D islands with decreasing temperature. They condense to make the LT phase below Tc. Small areas of the HT phase also exist below Tc. The observed temperature-dependent evolution of the nanoscale inhomogeneities is consistent with the theoretical predictions for a second-order phase transition.