Unfolding/refolding of a plasma protein, human serum albumin (HSA), is studied using fluorescence correlation spectroscopy (FCS) and single molecule fluorescence resonance energy transfer (sm-FRET). Addition of cholesterol causes unfolding of HSA resulting in an increase in the hydrodynamic diameter (d_H = 2r_H) from 76 Å in the native state to 120 Å upon addition of 1 mM cholesterol. Addition of β-cyclodextrin to HSA (unfolded by cholesterol) restores the hydrodynamic diameter back to 78 Å. The cholesterol induced unfolding and β-cyclodextrin induced refolding are also monitored by measuring the distance between a FRET donor (CPM dye, D) and a FRET acceptor (Alexa 488, A) covalently attached to the protein (HSA). It is observed that the average D–A distance increases from 45 ± 1 Å at 0 mM cholesterol to 51 ± 1 Å at 1 mM cholesterol. Upon addition of β-cyclodextrin, the D–A distance is restored to 45 ± 1 Å. The binding study indicates that nearly 94% of HSA molecules remain bound to cholesterol in the absence of β-cyclodextrin and only 5% binds to cholesterol in the presence of β-cyclodextrin. As much as 57% of the HSA and 99% of the cholesterol molecules bind to β-cyclodextrin. Thus β-cyclodextrin removes cholesterol from HSA by hydrophobic binding to cholesterol (“strip off”) and also, itself binds to HSA. The conformational dynamics results suggest that addition of β-cyclodextrin restores native like binding free energy and folding dynamics.