The features of superfluid-Mott insulator phase transition in the array of dissipative nonlinear cavities are analyzed. We show analytically that the coupling to the bath can be reduced to renormalizing the eigenmodes of atom-cavity system. This gives rise to a localizing effect and drives the system into mixed states. For the superfluid state, a dynamical instability will lead to a sweeping to a localized state of photons. For the Mott state, a dissipation-induced fluctuation will suppress the restoring of long-range phase coherence driven by interaction.