Ecologists have fiercely debated for many decades whether populations are self-regulated by density-dependent biological mechanisms or are controlled by exogenous environmental forces. Here, a stochastic mechanistic model is used to show that the interaction of these two forces can explain observed large fluctuations in Dungeness crab (Cancer magister) numbers. Relatively small environmental perturbations interact with realistic nonlinear (density dependent) biological mechanisms, to produce dynamics that are similar to observations. This finding has implications throughout population biology, suggesting both that the study of deterministic density-dependent models is highly problematic and that stochastic models must include biologically relevant nonlinear mechanisms.