Vitreoscilla hemoglobin (VHb), a homodimeric protein containing two heme groups in its native state, was used as a model to investigate inclusion body approtein solubilization, prosthetic group incorporation, and reactivation. High-level expression in recombinant Escherichia coli results in accumulation of a substantial portion of heme-free VHb in inclusion bodies. VHb can be solubilized from these inclusion bodies by relatively low concentrations of urea with the dissolution midpoint at approximately 3.2M urea. Dissolution in the presence of stoichiometric heme shifts the dissolution midpoint to approximately 4.5M urea without influencing the dissolution properties of contaminant proteins, suggesting the effect is specific for VHb. Denaturation of apoVHb and holoVHb obtained from purified native VHb has midpoints of 2.9M and 5.1M urea, respectively. VHb solubilized from inclusion bodies with urea at concentrations from 0 to 3.5M urea can be regenerated by heme addition without dilution of urea to yield active holoVHb. The fraction of solubilized VHb reconstituted upon heme addition is maximum at around 30% when solubilization and reconstitution is conducted in less than 1M urea. At these low urea concentrations, approximately 5% of inclusion body VHb is solubilized. These results show the utility of prosthetic group addition to reconstitute holoVHb in the presence of urea. Also, these findings suggest that some inclusion body protein has partially folded conformation and that a fractional dissolution and refolding process may be advantageous.