Lucky you! It's a parasitized caterpillar. With time, many tiny beneficial insects will emerge. Let it do its thing so that you have more good guys in your garden next season.

Wow, that's neat. Didn't think these types of behaviors happen in my small peaceful urban backyard.

Ummm... dunno what species tqh11890's critter is, but it looks to me like a caterpillar that has formed a cocoon. THIS (above) photo is a tomato hornworm that has been parasitized by a species of tiny Braconid wasp. I often see these on my plants. Leave them because they devour the cats from within and so the "worms" no longer are eating, but instead ensuring another generation of parasitic wasps. The white rice-like objects are the cocoons of the wasp larvae that finished eating & exited the skin of the caterpillar to complete their metamorphosis.

tqh11890's critter is a parasitized cabbage looper.