Hsp12 of S. cerevisiae is upregulated several 100-fold in response to stress. Our phenotypic analysis showed that this protein is important for survival of a variety of stress conditions, including high temperature. In the absence of Hsp12, we observed changes in cell morphology under stress conditions. Surprisingly, in the cell, Hsp12 exists both as a soluble cytosolic protein and associated to the plasma membrane. The in vitro analysis revealed that Hsp12, unlike all other Hsps studied so far, is completely unfolded; however, in the presence of certain lipids, it adopts a helical structure. The presence of Hsp12 does not alter the overall lipid composition of the plasma membrane but increases membrane stability.