We present high spatial resolution (≈ 60–90 mas) images of the molecular hydrogen emission in the planetary nebula (PN) NGC 2346. The data were acquired during the system verification of the Gemini Multi-conjugate Adaptive Optics System + Gemini South Adaptive Optics Imager. At the distance of NGC 2346, 700 pc, the physical resolution corresponds to ≈ 56 AU, which is slightly higher than an [N ii] image of NGC 2346 that was obtained with the Hubble Space Telescope/WFPC2. With this unprecedented resolution, for the first time we were able to study the structure of the H2 gas within the nebula in detail. We found it to be composed of knots and filaments, which at a lower resolution had appeared to be a uniform torus of material. We explain how the formation of the clumps and filaments in this PN are consistent with a mechanism in which a central hot bubble of nebular gas surrounding the central star has been depressurized, and the thermal pressure of the photoionized region drives the fragmentation of the swept-up shell.