Atomic Rydberg interactions allow one to create atom-light entanglement that can be used for diverse applications in quantum information science. The interaction-induced dephasing of collective atomic states is often the dominant contribution to the entanglement generation process in atomic ensembles. Although the mechanism has been used widely, its dynamics has not been previously observed, while its consequences have sometimes been ascribed instead to the presence of the excitation blockade. Here we report a study of the temporal evolution of an initially unentangled Rydberg spin wave into an (entangled) Dicke state. By comparing our observations to results of numerical simulations, we elucidate how the interaction-induced dephasing is responsible for entanglement generation in many-atom settings. These results have relevance to broad classes of applications for collective atomic systems, including driving of collective atomic qubits, on-demand generation of single photons, and preparation of entangled states involving atoms or light.

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• Quantum optics
• Rydberg gases