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Abstract A pearl‐like sheen (i.e., pearlescence) is seen in many natural materials like nacre and in some commercial paints and cosmetics. This phenomenon is attributed to the interaction of light with plate‐like particles in the material. Here, for the first time, pearlescence is demonstrated in soft millimeter‐scale capsules that contain no plate‐like particles. The capsules have a thin (~500 µm) outer shell ofN‐isopropylacrylamide (NIPA) hydrogel, which has a lower critical solution temperature (LCST) of 32 °C. When a transparent NIPA‐shelled capsule is heated above this LCST, it turns pearlescent. The effect is reversible, with the transparent state being recovered upon cooling. This is thefirst example of reversible pearlescencein any solid. Specular reflectance measurements show that the pearlescence of the capsules is comparable to that of natural pearls. Pearlescence is not observed in NIPA hydrogels; it arises only in NIPA‐shelled capsules, and that too only when the shell is thin. Above its LCST, the NIPA shell shrinks and gets stretched, and nanoscale NIPA‐rich domains arise within this shell, which induce the pearlescence. This study sheds fresh insight into the nature of pearlescence, on how it can be tuned, and on how this property can be introduced into various soft materials.