At small layer separations, the ground state of a ν = 1 bilayer quantum Hall system exhibits spontaneous interlayer phase coherence. The evolution of this state with increasing layer separation d has been a matter of controversy. We report on small system exact diagonalization calculations which suggest that a single-phase transition, likely of first order, separates incompressible states with strong interlayer correlations from compressible states with weak interlayer correlations. We find a dependence of the phase boundary on d and interlayer tunneling amplitude that is in very good agreement with recent experiments.