The worldwide loss of species diversity brings urgency to understanding how diverse ecosystems maintain stability. Whereas early ecological ideas and classic observations suggested that stability increases with diversity, ecological theory makes the opposite prediction, leading to the long-standing “diversity-stability debate.” Here, we show that this puzzle can be resolved if growth scales as a sublinear power law with biomass (exponent <1), exhibiting a form of population self-regulation analogous to models of individual ontogeny. We show that competitive interactions among populations with sublinear growth do not lead to exclusion, as occurs with logistic growth, but instead promote stability at higher diversity. Our model realigns theory with classic observations and predicts large-scale macroecological patterns. However, it makes an unsettling prediction: Biodiversity loss may accelerate the destabilization of ecosystems.