One of the most challenging tasks in the development of protein pharmaceuticals is to deal with physical and chemical instabilities of proteins. Protein instability is one of the major reasons why protein pharmaceuticals are administered traditionally through injection rather than taken orally like most small chemical drugs. Protein pharmaceuticals usually have to be stored under cold conditions or freeze-dried to achieve an acceptable shelf life. To understand and maximize the stability of protein pharmaceuticals or any other usable proteins such as catalytic enzymes, many studies have been conducted, especially in the past two decades. These studies have covered many areas such as protein folding and unfolding/denaturation, mechanisms of chemical and physical instabilities of proteins, and various means of stabilizing proteins in aqueous or solid state and under various processing conditions such as freeze-thawing and drying. This article reviews these investigations and achievements in recent years and discusses the basic behavior of proteins, their instabilities, and stabilization in aqueous state in relation to the development of liquid protein pharmaceuticals.