We are developing an experimental system for testing the effects of macromolecular crowding and molecular confinement on protein structure. In the present study, solvent effects on the secondary structure of two proteins were examined by circular dichroism following encapsulation in the hydrated pores of a silica glass matrix by the sol-gel method. Changes in the unfolded conformations of encapsulated apomyoglobin and reduced serum albumin were analyzed after equilibration with aqueous solutions of natural osmolytes, short-chain alcohols, polyethylene glycol, and a complete series of Hofmeister cations. In many instances, the α-helical content of the encapsulated protein was increased by addition of solutes at concentrations that have no effect on the protein in the absence of the glass. The results are discussed from the perspective of water structure. We argue that perturbed water at the silica interface causes an increase in the average free energy of the bulk water phase which, consequently, diminishes the strength of the hydrophobic effect inside the glass matrix and destabilizes the conformation of encapsulated proteins. We propose that solutes can increase the strength of the hydrophobic effect and influence folding equilibria without directly interacting with the protein. A hypothesis is provided for the apparent paradox that kosmotropic (strongly water binding) anions favor native protein structure, whereas chaotropic (weakly water binding) cations enhance native protein structure. The encapsulation results suggest that macromolecular crowding and molecular confinement are accompanied by hydration effects that may oppose or potentiate the stabilizing effects of excluded volume on protein structure, depending on the surface chemistry of the crowding agent and its influence on bulk water structure. In the crowded environment of a living cell, excluded volume effects, surface-induced water structure, and compatible solutes are expected to complement the dominant forces in protein folding.