Most proteins fold during biosynthesis on the ribosome1, and co-translational folding energetics, pathways and outcomes of many proteins have been found to differ considerably from those in refolding studies. The origin of this folding modulation by the ribosome has remained unknown. Here we have determined atomistic structures of the unfolded state of a model protein on and off the ribosome, which reveal that the ribosome structurally expands the unfolded nascent chain and increases its solvation, resulting in its entropic destabilization relative to the peptide chain in isolation. Quantitative 19F NMR experiments confirm that this destabilization reduces the entropic penalty of folding by up to 30 kcal mol−1 and promotes formation of partially folded intermediates on the ribosome, an observation that extends to other protein domains and is obligate for some proteins to acquire their active conformation. The thermodynamic effects also contribute to the ribosome protecting the nascent chain from mutation-induced unfolding, which suggests a crucial role of the ribosome in supporting protein evolution. By correlating nascent chain structure and dynamics to their folding energetics and post-translational outcomes, our findings establish the physical basis of the distinct thermodynamics of co-translational protein folding.