In normal metals, the magnetic-moment of impurity-spins disappears below a characteristic Kondo temperature, TK. This marks the formation of a polarized cloud of conduction band electrons that screen the magnetic moment . In contrast, moments embedded in insulators remain unscreened at all temperatures. This raises the question about the fate of magnetic-moments in intermediate, pseudogap systems, such as graphene. In these systems coupling between the local moment and the conduction band electrons is predicted to drive a quantum phase-transition between a local-moment phase and a Kondo-screened singlet phase as illustrated in Fig. 1A. However, attempts to experimentally confirm these predictions and their intriguing consequences such as the ability to electrostatically tune magnetic-moments, have been elusive. Here we report the observation of Kondo screening and the quantum phase-transition between screened and unscreened phases of vacancy magnetic-moments in graphene. Using scanning-tunneling-microscopy (STM), spectroscopy (STS) and numerical-renormalization-group (NRG) calculations, we identified Kondo-screening by its spectroscopic signature and mapped the quantum phase-transition as a function of coupling strength and chemical potential. We show that the coupling strength can be tuned across this transition by variations in the local curvature and furthermore that the transition makes it possible to turn the magnetic-moment on and off with a gate voltage.