The design and construction of synthetic protocells capable of stimuli response and homeostatic regulation is an important challenge for synthetic protobiology. Here, we develop a step toward the construction of model protocells capable of a hypotonic stress-induced volume response that facilitates an increase in membrane permeability and the triggering of endogenous enzyme reactions. We describe a facile self-transformation process for constructing single- or multichambered molecularly crowded protocells based on the osmotic reconfiguration of lipid-coated coacervate droplets into multicompartmentalized coacervate vesicles. Hypotonic swelling broadens membrane permeability and increases transmembrane transport such that protease-based hydrolysis and enzyme cascades can be triggered and enhanced within the protocells by osmotically induced expansion. Specifically, we demonstrate how the enhanced production of nitric oxide (NO) within the swollen coacervate vesicles can be used to induce in vitro blood vessel vasodilation in thoracic artery rings. Our approach provides opportunities for designing reconfigurable model protocells capable of homeostatic volume regulation, dynamic structural reorganization, and adaptive functionality in response to changes in environment osmolarity, and could find applications in biomedicine, cellular diagnostics, and bioengineering.