We report the effect of trimethylamine N-oxide (TMAO) on the solvation of nonpolar solutes in water studied with molecular dynamics (MD) simulations and free-energy calculations. The simulation data indicate the occurrence of a length scale crossover in the TMAO interaction with repulsive Weeks-Chandler-Andersen (WCA) solutes: while TMAO is depleted from the hydration shell of a small WCA solute (methane) and increases the free-energy cost of solute-cavity formation, it preferentially binds to a large WCA solute (α-helical polyalanine), reducing the free-energy cost of solute-cavity formation via a surfactant-like mechanism. Significantly, we show that this surfactant-like behaviour of TMAO reinforces the solvent-mediated attraction between large WCA solutes by means of an entropic force linked to the interfacial accumulation of TMAO. Specifically, this entropic force arises from the natural tendency of adsorbed TMAO molecules to mix back into the bulk. It therefore favours solute-solute contact states that minimise the surface area exposed to the solvent and have a small overall number of TMAO molecules adsorbed. In contrast to the well-known depletion force, its effect is compensated by enthalpic solute-solvent interactions. Correspondingly, the hydrophobic association free energy of the large α-helical solutes passes through a minimum at low TMAO concentration when cohesive solute-solvent van der Waals interactions are considered. The observations reported herein are reminiscent to cosolvent effects on hydrophobic polymer coil-globule collapse free energies (Bharadwaj et al., Commun. Chem. 2020, 3, 165) and may be of general significance in systems whose properties are determined by hydrophobic self-assembly.