Autocatalysis and chemical amplification are characteristic properties of living systems, and they give rise to behaviors such as increased sensitivity, responsiveness, and self-replication. Here we report a synthetic system in which a unique form of compartmentalization leads to nonlinear, autocatalytic behavior. The compartment is a reversibly formed capsule in which a reagent is sequestered. Reaction products displace the reagent from the capsule into solution and the reaction rate is accelerated. The resulting self-regulation is sensitive to the highly selective molecular recognition properties of the capsule.