This paper presents an analysis of plots of enthalpy versus heat capacity change at 25 degrees C for the unfolding of proteins and for the dissolution of gaseous, liquid and solid solutes, first reported by Murphy, Privalov & Gill. The negative slope in the enthalpy plot for proteins is interpreted as arising from a large penalty associated with burying polar groups in the protein interior. The small enthalpy changes that accompany protein unfolding at 25 degrees C are also discussed. It is argued that the combined effects of hydrogen bond formation and close packing predict a large positive enthalpy of unfolding. Electrostatic calculations indicate that the penalty associated with burying polar groups is large enough to effectively cancel these terms, leading to the small net enthalpy changes that are observed. The free energy changes associated with protein folding are also discussed. The free energy cost of burying polar groups largely compensates for the stabilizing contribution of the hydrophobic effect and would appear to account for the fact that proteins are marginally stable, independent of their size and of their relative hydrophobicities.