Macromolecular crowding is a distinguishing property of intracellular media. Knowledge on the structure and dynamics of a protein in a crowded environment is essential for a complete understanding of its function. Reduction in intermolecular space could cause structural and functional alterations. Here, we have studied a model protein barstar to see how polyethylene glycol (PEG)-induced crowding affects its various structural states (native, unfolded and molten-globule-like) with different extents of change in conformational heterogeneity. Intramolecular distances and distance distributions were determined by time-resolved Forster resonance energy transfer from Trp53 to several acceptor sites by analysis of fluorescence decay kinetics using the Maximum Entropy Method. We observed PEG-induced narrowing of population distributions along with shifting of populations towards more compact states. Structural compactness also resulted in the slowing down of internal dynamics of the protein as revealed by fluorescence anisotropy decay kinetics of the fluorophore IAEDANS attached at several sites.