To understand protein folding problem under physiological condition, usually taken as dilute aqueous buffer at pH 7.0 and 25 °C, knowledge of properties of folding intermediates is important, such as molten globule (MG). We observed that polyethylene glycol 400 Da (PEG 400) induces molten globule state conformation in cytochrome c at pH 7.0 and 25 °C. This PEG-induced MG state has: (i) native tertiary structure partially perturbed, (ii) unperturbed native secondary structure, (iii) newly exposed hydrophobic patches, and (iv) has 1.58 times more hydrodynamic volume than that of the native protein. Isothermal titration calorimetry and docking studies showed specific binding between PEG 400 and cytochrome c. The study delineates that PEG-protein interactions are more complex than the excluded-volume. The soft interactions need to be seriously studied in crowding milieu that leads to destabilization of protein and overcome stabilizing exclusion volume effect. This study not only can help in unraveling the mystery of steps involved in the proper folding of proteins to solve the massively complicated problems of protein folding but also provides novel insights towards importance of structural change in proteins inside cell where intermediate states of protein import-export easily via membranes rather than native form of proteins.