The folding and unfolding of a three-helix bundle protein were explored with molecular-dynamics simulations, cluster analysis, and weighted-histogram techniques. The folding-unfolding process occurs by means of a "folding funnel," in which a uniform and broad distribution of conformational states is accessible outside of the native manifold. This distribution narrows near a transition region and becomes compact within the native manifold. Key thermodynamic steps in folding include initial interactions around the amino-terminal helix-turn-helix motif, interactions between helices I and II, and, finally, the docking of helix III onto the helix I-II subdomain. A metastable minimum in the calculated free-energy surface is observed at approximately 1.5 times the native volume. Folding-unfolding thermodynamics are dominated by the opposing influences of protein-solvent energy, which favors unfolding, and the overall entropy, which favors folding by means of the hydrophobic effect.