Interactions of cytochrome c (cyt c) with cardiolipin (CL) partially unfold the protein, activating its peroxidase function, a critical event in the execution of apoptosis. However, structural features of the altered protein species in the heterogeneous ensemble are difficult to probe with ensemble averaging. Analyses of the dye-to-heme distance distributions P(r) from time-resolved FRET (TR-FRET) have uncovered two distinct types of CL-bound cyt c conformations, extended and compact. We have combined TR-FRET, fluorescence correlation spectroscopy (FCS), and biolayer interferometry to develop a systematic understanding of the functional partitioning between the two conformations. The two subpopulations are in equilibrium with each other, with a submillisecond rate of conformational exchange reflecting the protein folding into a compact non-native state, as well as protein interactions with the lipid surface. Electrostatic interactions with the negatively charged lipid surface that correlate with physiologically relevant changes in CL concentrations strongly affect the kinetics of cyt c binding and conformational exchange. A predominantly peripheral binding mechanism, rather than deep protein insertion into the membrane, provides a rationale for the general denaturing effect of the CL surface and the large-scale protein unfolding. These findings closely relate to cyt c folding dynamics and suggest a general strategy for extending the time window in monitoring the kinetics of folding.