Flavodoxins are classified in two groups according to the presence or absence of a approximately 20-residue loop of unknown function. In the accompanying paper (36), we have shown that the differentiating loop from the long-chain Anabaena PCC 7119 flavodoxin is a peripheral structural element that can be removed without preventing the proper folding of the apoprotein. Here we investigate the role played by the loop in the stability and folding mechanism of flavodoxin by comparing the equilibrium and kinetic behavior of the full-length protein with that of loop-lacking, shortened variants. We show that, when the loop is removed, the three-state equilibrium thermal unfolding of apoflavodoxin becomes two-state. Thus, the loop is responsible for the complexity shown by long-chain apoflavodoxins toward thermal denaturation. As for the folding reaction, both shortened and wild type apoflavodoxins display three-state behavior but their folding mechanisms clearly differ. Whereas the full-length protein populates an essentially off-pathway transient intermediate, the additional state observed in the folding of the shortened variant analyzed seems to be simply an alternative native conformation. This finding suggests that the long loop may also be responsible for the accumulation of the kinetic intermediate observed in the full-length protein. Most revealing, however, is that the influence of the loop on the overall conformational stability of apoflavodoxin is quite low and the natively folded shortened variant Delta(120-139) is almost as stable as the wild type protein. The fact that the loop, which is not required for a proper folding of the polypeptide, does not even play a significant role in increasing the conformational stability of the protein supports our proposal (36) that the differentiating loop of long-chain flavodoxins may be related to a recognition function, rather than serving a structural purpose.