A strong nonlinear coupling between harmonic oscillators is highly desirable for quantum information processing and quantum simulation, but is difficult to achieve in many physical systems. Here, we exploit the Coulomb interaction between two trapped ions to achieve strong nonlinear coupling between normal modes of motion at the single-phonon level. We experimentally demonstrate phonon up- and down-conversion and apply this coupling to directly measure the parity and Wigner functions of the ions' motional states. Our results represent the fully quantum operation of a degenerate parametric oscillator and hold promise for quantum computation schemes that involve continuous variables.