In an effort to scale down electronic devices to atomic dimensions, the use of transition-metal oxides may provide advantages over conventional semiconductors. Their high carrier densities and short electronic length scales are desirable for miniaturization, while strong interactions that mediate exotic phase diagrams open new avenues for engineering emergent properties. Nevertheless, understanding how their correlated electronic states can be manipulated at the nanoscale remains challenging. Here, we use angle-resolved photoemission spectroscopy to uncover an abrupt destruction of Fermi liquid-like quasiparticles in the correlated metal LaNiO₃ when confined to a critical film thickness of two unit cells. This is accompanied by the onset of an insulating phase as measured by electrical transport. We show how this is driven by an instability to an incipient order of the underlying quantum many-body system, demonstrating the power of artificial confinement to harness control over competing phases in complex oxides with atomic-scale precision.