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Tardigrades are microscopic animals that survive desiccation by inducing biostasis. To survive drying tardigrades rely on intrinsically disordered CAHS proteins, which also function to prevent perturbations induced by drying in vitro and in heterologous systems. CAHS proteins have been shown to form gels both in vitro and in vivo, which has been speculated to be linked to their protective capacity. However, the sequence features and mechanisms underlying gel formation and the necessity of gelation for protection have not been demonstrated. Here we report a mechanism of fibrillization and gelation for CAHS D similar to that of intermediate filament assembly. We show that in vitro, gelation restricts molecular motion, immobilizing and protecting labile material from the harmful effects of drying. In vivo, we observe that CAHS D forms fibrillar networks during osmotic stress. Fibrillar networking of CAHS D improves survival of osmotically shocked cells. We observe two emergent properties associated with fibrillization; (i) prevention of cell volume change and (ii) reduction of metabolic activity during osmotic shock. We find that there is no significant correlation between maintenance of cell volume and survival, while there is a significant correlation between reduced metabolism and survival. Importantly, CAHS D's fibrillar network formation is reversible and metabolic rates return to control levels after CAHS fibers are resolved. This work provides insights into how tardigrades induce reversible biostasis through the self‐assembly of labile CAHS gels.