We quantitatively analyze the dynamics of the quantum phase distribution associated with the reduced density matrix of a system, as the system evolves under the influence of its environment with an energy-preserving quantum nondemolition (QND) type of coupling. We take the system to be either an oscillator (harmonic or anharmonic) or a two-level atom (or equivalently, a spin-1/2 system), and model the environment as a bath of harmonic oscillators, initially in a general squeezed thermal state. The impact of the different environmental parameters is explicitly brought out as the system starts out in various initial states. The results are applicable to a variety of physical systems now studied experimentally with QND measurements. © 2007 The American Physical Society.