The proximity-effect, a phenomenon whereby materials in contact appropriate each other’s electronic-properties, is widely used in nano-scale devices to induce electron-correlations at heterostructure interfaces. Commonly observed proximity-induced correlation effects include superconductivity, magnetism, and spin-orbit interactions. Thus far however proximity-induced charge density wave (CDW) correlated states have remained elusive. This is primarily because they are obscured by screening in 3D metals and by defect scattering at interfaces. Here we report the first observation of a proximity-induced CDW, made possible by employing 2D-materials with pristine and atomically smooth surfaces. Using scanning tunneling microscopy (STM) and spectroscopy (STS) together with theoretical modeling to probe the interface between graphene and a 1T-TaS2 crystal, we show that interactions induce a CDW within graphene and modify the band structure of 1T-TaS2. We further show that the mechanism underlying the proximity-induced CDW is driven by short-range exchange interactions that are distinctly different from previously observed proximity-effects.