We report the direct time domain observation of a many-body process in a two-dimensional system: small polaron formation from the localization of a conduction band electron in NaCl thin films of unit cell thickness. Contrary to theoretical prediction for bulk NaCl crystal where an electron polaron does not exist, time-resolved two-photon photoemission reveals small polaron formation from delocalized conduction band electrons in crystalline NaCl thin films. The increased deformability and the reduced electronic bandwidth of a crystalline lattice in the thin film format are both responsible for the formation of small polarons that are absent in bulk solids.