The significance of performance testing in software applications is to ensure that an application functions effectively under various conditions before its deployment. This type of testing assesses responsiveness, stability, and speed, helping to identify and rectify performance bottlenecks. By conducting performance testing, developers can gauge how an application behaves under heavy load or stress, ultimately enhancing user experience. Furthermore, addressing performance issues early in the development lifecycle reduces costs associated with post-deployment fixes and ensures that the application meets both functional and non-functional requirements.