Experimental tools of increasing sophistication have been employed in recent years to study protein folding and misfolding. Folding is considered a complex process, and one way to address it is by studying small proteins, which seemingly possess a simple energy landscape with essentially only two stable states, either folded or unfolded. The B1-IgG binding domain of protein L (PL) is considered a model two-state folder, based on measurements using a wide range of experimental techniques. We applied single-molecule fluorescence resonance energy transfer (FRET) spectroscopy in conjunction with a hidden Markov model analysis to fully characterize the energy landscape of PL and to extract the kinetic properties of individual molecules of the protein. Surprisingly, our studies revealed the existence of a third state, hidden under the two-state behavior of PL due to its small population, ∼7%. We propose that this minority intermediate involves partial unfolding of the two C-terminal β strands of PL. Our work demonstrates that single-molecule FRET spectroscopy can be a powerful tool for a comprehensive description of the folding dynamics of proteins, capable of detecting and characterizing relatively rare metastable states that are difficult to observe in ensemble studies.