We show that post-synthetic small-molecule intercalation can significantly reduce the electronic confinement of 2D hybrid perovskites. Using a combined experimental and theoretical approach, we explain structural, optical, and electronic effects of intercalating highly polarizable molecules in layered perovskites designed to stabilize the intercalants. Polarizable molecules in the organic layers substantially alter the optical and electronic properties of the inorganic layers. By calculating the spatially resolved dielectric profiles of the organic and inorganic layers within the hybrid structure, we show that the intercalants afford organic layers that are more polarizable than the inorganic layers. This strategy reduces the confinement of excitons generated in the inorganic layers and affords the lowest exciton binding energy for an n = 1 perovskite of which we are aware. We also demonstrate a method for computationally evaluating the exciton’s binding energy by solving the Bethe-Salpeter equation for the exciton, which includes an ab initio determination of the material’s dielectric profile across organic and inorganic layers. This new semi-empirical method goes beyond the imprecise phenomenological approximation of abrupt dielectric-constant changes at the organic-inorganic interfaces. This work shows that incorporation of polarizable molecules in the organic layers, through intercalation or covalent attachment, is a viable strategy for tuning 2D perovskites towards mimicking the reduced electronic confinement and isotropic light absorption of 3D perovskites while maintaining the greater synthetic tunability of the layered architecture.