Using archival Rossi X-Ray Timing Explorer data, we show that the ultracompact X-ray binary in NGC 1851 exhibits large amplitude X-ray flux variations of more than a factor of 10 on time-scales of days to weeks and undergoes sustained periods of months where the time-averaged luminosity varies by factors of 2. Variations of this magnitude and time-scale have not been reported previously in other ultracompact X-ray binaries. Mass transfer in ultracompact binaries is thought to be driven by gravitational radiation and the predicted transfer rates are so high that the discs of ultracompact binaries with orbits as short as that of this object should not be susceptible to ionization instabilities. Therefore, the variability characteristics we observe were unexpected and need to be understood. We briefly discuss a few alternatives for producing the observed variations in light of the fact that the viscous time-scale of the disc is of the order of a week, comparable to the shorter time-scale variation that is observed but much less than the longer term variation. We also discuss the implications for interpretation of observations of extragalactic binaries if the type of variability seen in the source in NGC 1851 is typical.