Quantum fluctuations of the electromagnetic vacuum are responsible for physical effects such as the Casimir force and the radiative decay of atoms, and set fundamental limits on the sensitivity of measurements. Entanglement between photons can produce correlations that result in a reduction of these fluctuations below the ordinary vacuum level, allowing measurements that surpass the standard quantum limit in sensitivity(1-5). The effects of such 'squeezed states' of light on matter were first considered in a prediction(6) of the radiative decay rates of atoms in squeezed vacuum. Despite efforts to demonstrate such effects in experiments with natural atoms(7-9), a direct quantitative observation of this prediction has remained elusive. Here we report a twofold reduction of the transverse radiative decay rate of a superconducting artificial atom coupled to continuum squeezed vacuum. The artificial atom is effectively a two-level system formed by the strong interaction between a superconducting circuit and a microwave-frequency cavity. A Josephson parametric amplifier is used to generate quadrature-squeezed electromagnetic vacuum. The observed twofold reduction in the decay rate of the atom allows the transverse coherence time, T-2, to exceed the ordinary vacuum decay limit, 2T(1). We demonstrate that the measured radiative decay dynamics can be used to reconstruct the Wigner distribution of the itinerant squeezed state. Our results confirm a canonical prediction(6) of quantum optics and should enable new studies of the quantum light-matter interaction.