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We characterize, at the atomic level, the mechanism and thermodynamics of folding of a small ␣͞␤ protein. The thermodynamically significant states of segment B1 of streptococcal protein G (GB1) are probed by using the statistical mechanical methods of importance sampling and molecular dynamics. From a thermodynamic standpoint, folding commences with overall collapse, accompanied by formation of ϳ35% of the native structure. Specific contacts form at the loci experimentally inferred to be structured early in folding kinetics studies. Our study reveals that these initially structured regions are not spatially adjacent. As folding progresses, f luid-like nonlocal native contacts form, with many contacts forming and breaking as the structure searches for the native conformation. Although the ␣-helix forms early, the ␤-sheet forms concomitantly with the overall topology. Water is present in the protein core up to a late stage of folding, lubricating conformational transitions during the search process. Once 80% of the native contacts have formed, water is squeezed from the protein interior and the structure descends into the native manifold. Examination of the onset of side-chain mobility within our model indicates side-chain motion is most closely linked to the overall volume of the protein and no sharp order-disorder transition appears to occur. Exploration of models for hydrogen deuterium exchange show qualitative agreement with equilibrium measurement of hydrogen͞deuterium protection factors.The protein folding problem-understanding how a polypeptide chain reaches its native conformation-is a long-standing challenge in molecular biophysics. There has been a significant effort to develop a theoretical basis for this phenomenon in recent years (1-3). Theoretical models of protein folding are based on analogy with better-studied physical phenomena, e.g., spin glasses and polymer physics, and on simulations involving highly simplified representations of protein energetics and structure. These studies have suggested a general framework for understanding the folding process. However, direct testing of this framework and a compelling demonstration of its relevance to real proteins has not been realized. Furthermore, despite significant advances in experimental methodologies (4-6), a complete and unambiguous description of folding at the atomic level has yet to emerge. These points motivate the current theoretical studies to explore the folding thermodynamics of a small protein with molecular simulations.We attempt, in this study, to address some of the issues underlying a more accurate energetic description of folding, on the one hand, and a more complete atomic description, on the other, by using a full-atomic model of the solvated protein with empirically derived interaction forces. The empirical force field we use, CHARMM (7), has been developed to represent equilibrium properties of both native proteins and peptides (or unstructured fragments of polypeptide chains), thus the use of this force field to study ...