Lead halide perovskites suffer from water and moisture instability due to the highly ionic nature of the crystal structures, though a few groups took advantage of it for chemical transformation via water-assisted strategy. However, direct exposure of the perovskite to bulk water leads to uncontrolled chemical transformation. Here, we report a controlled chemical transformation of CsPbBr3 to CsPb2Br5 triggered by nanoconfined water by placing CsPbBr3 in the nonpolar phase within a reverse micelle. The chemical transformation reaction is probed by using steady-state and time-resolved optical spectroscopy. We observe absorption and photoluminescence in the UV region stemming clearly from the CsPb2Br5 phase upon interaction with the reverse micellar aqueous solution. Transmission electron microscopy and X-ray diffraction measurements further provided the structure and morphology. Our results direct the formation of CsPbBr3–CsPb2Br5 nanocomposite under dry conditions while the chemically transformed CsPb2Br5 phase exists only in moist conditions, which we explain via the CsBr-stripping mechanism.