The confinement of electromagnetic radiation to sub-wavelength scales relies on strong light–matter interactions. In the infrared and terahertz spectral ranges, phonon polaritons are commonly employed to achieve such subdiffractional light confinement and these optical modes offer much lower losses in compared to plasmon polaritons. Hyperbolic phonon polaritons in anisotropic materials, such as hafnium-based dichalcogenides, offer a promising platform and we report here on ultraconfined phonon polaritons with confinement factors exceeding λ0/250 in the terahertz spectral range. This extreme light compression within deeply subwavelength thin films is enabled by the large magnitude of the light–matter coupling strength in these compounds and the natural hyperbolicity of HfSe2. These findings emphasize the role of light–matter coupling for polariton confinement, which for phonon polaritons in polar dielectrics is dictated by the transverse–longitudinal optical phonon energy splitting. Our results demonstrate transition-metal dichalcogenides as an enabling platform for terahertz nanophotonic applications.