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2-Methyl-2,4-pentanediol (MPD) is the most popular chemical additive used for crystallization of biological macromolecules. However, the mechanism of its action on proteins in aqueous solution is not well understood. We have carried out a systematic analysis of the conformation and environment of MPD molecules bound to proteins. We find that the majority of MPD molecules adopt their most stable conformer. They prefer to bind to hydrophobic sites with a distinct preference for leucine side chains. Most MPD binding sites involve amino-acid residues in helical or β-sheet structures. MPD binding to proteins is penetrative, leading to displacement of water molecules in grooves and cavities (sometimes ligand-binding and active sites) on the protein surface. This results in a large reduction of solvent-accessible area, which can have significant implications for protein stability. The packing of the MPD molecules by the protein is not optimal and usually some other solvent molecules are also bound along with it. Our analysis suggests that MPD is not as strong a denaturant as often suggested. It promotes stabilization of the protein by preferential hydration, which is facilitated by attachment of MPD molecules to the hydrophobic surface.