Guanidine hydrochloride (Gdn-HCl) is the most commonly used denaturant for proteins. Contrary to expectation, we found that Gdn-HCl at low concentrations refolds acid-unfolded apomyoglobin and cytochrome c, stabilizing the molten globule state, i.e. a compact denatured state with a significant amount of secondary structure, but substantially disordered tertiary structure. A further increase in Gdn-HCl concentration, above 1 M, caused co-operative unfolding of the molten globule state. Similar sequential folding and unfolding transitions were also observed at neutral pH with a synthetic amphiphilic peptide consisting of Lys and Leu residues, indicating the generality of the phenomenon. Although the Gdn-HCl-induced refolding and unfolding transitions were puzzling at first glance, we show that they are readily interpreted in terms of the differential action of Gdn-HCl. We also show that the comparison of the unfolding curves for the molten globule and native states provides a measure of the buried surface area upon formation of the molten globule state.