We report studies of unfolding and ultrafast hydration dynamics of the protein human serum albumin. Unique in this study is our ability to examine different domains of the same protein and the intermediate on the way to the unfolded state. With femtosecond resolution and site-selective labeling, we isolate the dynamics of domains I and II of the native protein, domain I of the intermediate at 2 M guanidine hydrochloride, and the unfolded state at 6 M of the denaturant. For studies of unfolding, we used the fluorophores, acrylodan (covalently bound to Cys-34 in domain I) and the intrinsic tryptophan (domain II), whereas for hydration dynamics, we probed acrylodan and prodan; the latter is bound to domain II. From the time-dependent spectra and the correlation functions, we obtained the time scale of dynamically ordered water: 57 ps for the more stable domain I and 32 ps for the less stable domain II, in contrast to approximately 0.8 ps for labile, bulk-type water. This trend suggests an increased hydrophilic residues-water interaction of domain I, contrary to some packing models. In the intermediate state, which is characterized by essentially intact domain I and unfolded domain II, the dynamics of ordered water around domain I is nearly the same (61 ps) as that of native state (57 ps), whereas that in the unfolded protein is much shorter (13 ps). We discuss the role of this fluidity in the correlation between stability and function of the protein.