One of the most extreme and fascinating examples of naturally occurring mutagenesis is represented by circular permutation. Circular permutations involve the linking of two chain ends and cleavage at another site. Here we report the first description of the folding mechanism of a naturally occurring circularly permuted protein, a PDZ domain from the green alga Scenedesmus obliquus. Data reveal that the folding of the permuted protein is characterized by the presence of a low energy off-pathway kinetic trap. This finding contrasts with what was previously observed for canonical PDZ domains that, although displaying a similar primary structure when structurally re-aligned, fold via an on-pathway productive intermediate. Although circular permutation of PDZ domains may be necessary for a correct orientation of their functional sites in multi-domain protein scaffolds, such structural rearrangement may compromise their folding pathway. This study provides a straightforward example of the divergent demands of folding and function.