We report on the results of numerical simulations of 1+1 dimensional SU(N) Yang-Mills theory with maximal supersymmetry at finite temperature and compactified on a circle. For large N this system is thought to provide a dual description of the decoupling limit of N coincident D1-branes on a circle. It has been proposed that at large N there is a phase transition at strong coupling related to the Gregory-Laflamme (GL) phase transition in the holographic gravity dual. In a high temperature limit there was argued to be a deconfinement transition associated to the spatial Polyakov loop, and it has been proposed that this is the continuation of the strong coupling GL transition. Investigating the theory on the lattice for SU(3) and SU(4) and studying the time and space Polyakov loops we find evidence supporting this. In particular at strong coupling we see the transition has the parametric dependence on coupling predicted by gravity. We estimate the GL phase transition temperature from the lattice data which, interestingly, is not yet known directly in the gravity dual. Fine tuning in the lattice theory is avoided by the use of a lattice action with exact supersymmetry.