Time evolution of a two-atom system damped by a broad-band squeezed va
cuum is examined. We show that in the squeezed vacuum the collective a
tomic levels are no longer eigenstates of the system. Diagonalizing th
e density matrix of the system, we find new 'dressed' eigenstates of t
he system and show that the evolution of the population of the dressed
states is characterized by three different relaxation times, two of t
hem strongly modified by the squeezed correlations. We find that the e
ffect of the squeezed vacuum on the system appears on a time-scale lar
ger than the shortest relaxation time of the system, and the relaxatio
n time of the system to the pure two-atom squeezed state is strongly d
ependent on the intensity N of the squeezed vacuum and increases with
increasing N.