We introduce a model describing the competition of interactions between N two-level systems (TLSs) against decoherence. We apply it to analyze dye molecules in an optical microcavity, where molecular vibrations provide a local source for decoherence. The most interesting case is when decoherence strongly affects each individual TLS, e.g., via broadening of emission lines as well as vibrational satellites; however, its influence is strongly suppressed for large N due to the interactions between TLSs. In this interaction-dominated regime we find unique signatures in the emission spectrum, including strong O(N) level shifts, as well as 1/N suppression of both the decoherence width and the vibrational satellites. These effects are most pronounced in the unexplored regime near 50% polarization of the TLSs.