We predict a dynamical classical superfluid-insulator transition in a Bose-Einstein condensate trapped in an optical and a magnetic potential. In the tight-binding limit, this system realizes an array of weakly coupled condensates driven by an external harmonic field. For small displacements of the parabolic trap about the equilibrium position, the condensates coherently oscillate in the array. For large displacements, the condensates remain localized on the side of the harmonic trap with a randomization of the relative phases. The superfluid-insulator transition is due to a discrete modulational instability, occurring when the condensate center of mass velocity is larger than a critical value.