Unfolded apocytochrome c acquires an α-helical conformation upon interaction with lipid. Folding kinetic results below and above the lipid's CMC, together with energy transfer measurements of lipid bound states, and salt-induced compact states in solution, show that the folding transition of apocytochrome c from the unfolded state in solution to a lipid-inserted helical conformation proceeds via a collapsed intermediate state (IC). This initial compact state is driven by a hydrophobic collapse of the polypeptide chain in the absence of the heme group and may represent a heme-free analogue of an early compact intermediate detected on the folding pathway of cytochrome c in solution. Insertion into the lipid phase occurs via an unfolding step of IC through a more extended state associated with the membrane surface (IS). While IC appears to be as compact as salt-induced compact states in solution with substantial α-helix content, the final lipid-inserted state (Hmic) is as compact as the unfolded state in solution at pH 5 and has an α-helix content which resembles that of native cytochrome c.