We study second-harmonic generation in a negative-index material cavity. The transmission spectrum shows a bandgap between the electric and magnetic plasma frequencies. The nonlinear process is made efficient by local phase-matching conditions between a forward-propagating pump and a backward-propagating second-harmonic signal. By simultaneously exciting the cavity with counterpropagating pulses, and by varying their relative phase difference, one is able to enhance or inhibit linear absorption and the second-harmonic conversion efficiency.