We discuss theoretically the influence of confinement on diffusion-reaction processes in polymer chains by combining analytical and simulation techniques. This is relevant to intrachain chemical reactions in finely divided media like microemulsions, for temperature-driven collapse of soluble/insoluble copolymers, and for early stages of protein folding where some confinement is achieved by molecular chaperones. It is shown that confinement can accelerate the processes in several ways: (i) by cutting long internal relaxation modes, (ii) by suppressing late stage energy barriers, and (iii) by increasing the initial concentration of reacting sites. Under certain conditions the reaction rates are found to go through a maximum for some intermediate confinement. This is a consequence of the interplay between effects i-iii mentioned above and the screening of hydrodynamic interactions that slows down the reactions.