Production of protein therapeutics often involves in vitro refolding from bacterial inclusion bodies and subsequent PEGylation to improve protein stability and plasma half-life. Here, we devised a novel strategy for one-step production of site-specific mono-PEGylated proteins with good bioactivity and improved biostability by integrating PEGylation and protein refolding (IPPR). Using lysozyme and recombinant human fibroblast growth factor 21 (rhFGF21) as model proteins, we showed that both PEGylation and refolding of denatured proteins have been simultaneously accomplished by IPPR with high efficiency of refolding yield and bioconjugation. PEGylated rhFGF21 by IPPR has a similar capacity as the native rhFGF21 to stimulate glucose uptake in 3T3-L1 cells, but exhibits prolonged blood glucose and triglyceride lowering activity levels in the ob/ob diabetic mouse model. Hence, IPPR will significantly facilitate the generation of protein therapeutics.