The mechanism of poly (N-isopropylacrylamide) (PNIPAAm)-assisted protein folding was investigated. An optimal concentration equivalent to a molar ratio of polymer to carbonic anhydrase B (CAB) of ca. 2 was observed, in which the refolding yield was improved by 28%. At concentration above the critical level, PNIPAAm promotes protein precipitation leading to lower refolding yields, which is more significant when high molecular weight polymers are used. Results of fluorescence analysis and equilibrium studies indicate that PNIPAAm enhances protein refolding by the formation of complexes with aggregation-prone folding intermediates via hydrophobic interactions, as PEG. Results of stepwise dilution experiments indicate the aggregation-prone intermediates of CAB populate at guanidine hydrochloride (GdnHCl) ranging from 2 to 1 M, which are stabilized by the chaotropic agent and may rapidly associate rapidly into insoluble aggregates upon further dilution via hydrophobic interactions. It was also shown that the formation of about one-third of the aggregates was mediated by unidentified processes other than the self-association of the aggregation-prone intermediates.