Ultracold atoms in optical lattices are ideal to study fundamentally new quantum many-body systems including frustrated or topological magnetic phases and supersolids. However, the necessary control of strong long-range interactions between distant ground state atoms has remained a long-standing goal. Optical dressing of ground state atoms via off-resonant laser coupling to Rydberg states is one way to tailor such interactions. Here we report the realization of coherent Rydberg dressing to implement a two-dimensional synthetic spin lattice. Our single-atom-resolved interferometric measurements of the many-body dynamics enable the microscopic probing of the interactions and reveal their highly tunable range and anisotropy. Our work marks the first step towards the use of laser-controlled Rydberg interactions for the study of exotic quantum magnets in optical lattices.