A mechanism for a large enhancement of nonlinear response due to microcavity effect is theoretically proposed for excitons coupled strongly with radiation field. For an appropriate choice of microcavity parameters, the energy of a coupled mode of cavity and exciton coincides with the transition energy between exciton and biexciton states. This scheme leads to a remarkable enhancement of a degenerate pump-probe signal due to the simultaneous enhancement of the internal field and nonlinear susceptibility. ©1997 American Institute of Physics.