The mechanism of protein stabilization by zwiterionic osmolytes has remained a long-standing puzzle. While the prevalent mechanistic hypothesis suggests an 'osmophobic' model in which osmolytes are assumed to stabilize proteins by preferentially excluding themselves from the protein surface, emerging evidences of preferential binding of popular osmolyte trimethyl amine N-oxide (TMAO) with hydrophobic macromolecules contradict this view. Here we address these contrasting perspectives by investigating the folding mechanism of a set of mini proteins in aqueous solutions of two di↵erent osmolytes glycine and TMAO, via free energy simulations. Our results demonstrate that, while both osmolytes are found to stabilize the folded conformation of the mini proteins, their mechanism of actions are mutually diverse: Specifically, glycine always depletes from the surface of all mini proteins, thereby conforming to the osmophobic model; but TMAO is found to display ambivalent signatures of proteinspecific preferential binding and exclusion to/from the protein surface. At molecular level, the presence of an extended hydrophobic patch in protein topology is found to be recurrent motif in proteins leading to favorable binding with TMAO. Finally, an analysis based upon the preferential interaction theory and folding free energetics reveals that irrespective of preferential binding vs exclusion of osmolytes, it is the relative preferential depletion of osmolytes on transition from folded to unfolded conformation of proteins, which drives the overall conformational equilibrium towards the folded state in presence of osmolytes. Taken together, moving beyond the model system and hypothesis, this work brings out ambivalent mechanism of osmolytes on proteins and provides an unifying justification.