Protein sequestration occurs when an active protein is sequestered by a repressor into an inactive complex. Using mathematical and computational modeling, we show how this regulatory mechanism (called "molecular titration") can generate ultrasensitive or "all-or-none" responses that are equivalent to highly cooperative processes. The ultrasensitive nature of the input-output response is mainly determined by two parameters: the dimer dissociation constant and the repressor concentration. Because in vivo concentrations are tunable through a variety of mechanisms, molecular titration represents a flexible mechanism for generating ultrasensitivity. Using physiological parameters, we report how details of in vivo protein degradation affect the strength of the ultrasensitivity at steady state. Given that developmental systems often transduce signals into cell-fate decisions on timescales incompatible with steady state, we further examine whether molecular titration can produce ultrasensitive responses within physiologically relevant time intervals. Using Drosophila somatic sex determination as a developmental paradigm, we demonstrate that molecular titration can generate ultrasensitivity on timescales compatible with most cell-fate decisions. Gene duplication followed by loss-of-function mutations can create dominant negatives that titrate and compete with the original protein. Dominant negatives are abundant in gene regulatory circuits, and our results suggest that molecular titration might be generating an ultrasensitive response in these networks.