We used Phi-value analysis to characterise the transition state for folding of a thermophilic protein at the relatively high temperature of 325 K. PhiF values for the folding of the three-helix bundle, peripheral subunit binding domain from Bacillus stearothermophilus (E3BD) were determined by temperature-jump experiments in the absence of chemical denaturants. E3BD folded in microseconds through a highly diffuse transition state. Excellent agreement was observed between experiment and the results from eight (independent) molecular dynamics simulations of unfolding at 373 K. We used a combination of heteronuclear NMR experiments and molecular dynamics simulations to characterise the denatured ensemble, and found that it contained very little persistent, residual structure. However, those regions that adopt helical structure in the native state were found by simulation to be poised for helix formation in the denatured state. These regions also had significant structure in the transition state for folding. The overall folding pathway appears to be nucleation-condensation.