IFABP is a small (15 kDa) protein consisting mostly of antiparallel β-strands that surround a large cavity into which ligands bind. We have previously used FCS to show that the native protein, labeled with fluorescein, exhibits dynamic fluctuation with a relaxation time of 35 μs. Here we report the use of FCS to study the unfolding of the protein induced by guanidine hydrochloride. Although the application of this technique to measure diffusion coefficients and molecular dynamics is straightforward, the FCS results need to be corrected for both viscosity and refractive index changes as the guanidine hydrochloride concentration increases. We present here a detailed study of the effects of viscosity and refractive index of guanidine hydrochloride solutions to calibrate FCS data. After correction, the increase in the diffusion time of IFABP corresponds well with the unfolding transition monitored by far ultraviolet circular dichroism. We also show that the magnitude of the 35 μs phase, reflecting the conformational fluctuation in the native state, decreases sharply as the concentration of denaturant increases and the protein unfolds. Although FCS experiments indicate that the unfolded state at pH 2 is rather compact and native-like, the radius in the presence of guanidine hydrochloride falls well within the range expected for a random coil.