We study the quantum dynamics of N=1 supergravity in four dimensions with a compact spatial circle. Supersymmetry ensures that the perturbative contributions to the Casimir energy on the circle cancel. However, instanton contributions remain. These render supersymmetric compactification on a circle unstable and the background dynamically decompactifies back to four dimensions. The calculation provides a testing ground for some old ideas in Euclidean quantum gravity. In particular, we show that gravitational instantons are associated to a new, infra-red scale which is naturally exponentially suppressed relative to the Planck scale and arises from the logarithmic running of the Gauss-Bonnet term. There are also some interesting technical details, including the non-cancellation of bosonic and fermionic determinants around the background of a self-dual gravitational instanton, despite the existence of supersymmetry.