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Since the advent of the laser, acousto-optic modulators have been an important tool for controlling light. Recent advances in on-chip lithium niobate waveguide technology present new opportunities for these devices. We demonstrate a collinear acousto-optic modulator in a suspended film of lithium niobate employing a high-confinement, wavelength-scale waveguide. By strongly confining the optical and mechanical waves, this modulator improves a figure-of-merit that accounts for both acousto-optic and electro-mechanical efficiency by orders of magnitude. Our device demonstration marks a significant technological advance in acousto-optics that promises a novel class of compact and low-power frequency shifters, tunable filters, non-magnetic isolators, and beam deflectors.