We report an experimental study concerning the capillary relaxation of a confined liquid droplet in a microscopic channel with a rectangular cross section. The confinement leads to a droplet that is extended along the direction normal to the cross section. These droplets, found in numerous microfluidic applications, are pinched into a peanutlike shape thanks to a localized, reversible deformation of the channel. Once the channel deformation is released, the droplet relaxes back to a pluglike shape. During this relaxation, the liquid contained in the central pocket drains towards the extremities of the droplet. Modeling such viscocapillary droplet relaxation requires considering the problem as 3D due to confinement. This 3D consideration yields a scaling model incorporating dominant dissipation within the droplet menisci. As such, the self-similar droplet dynamics is fully captured.