The villin headpiece folds autonomously in vitro forming three alpha-helical regions. Local propensities, however, strongly disfavor the formation of the C-terminal helix because most native residue pairs in that helix are hydrophobic/polar mismatches. Even the N-terminal helix is unfavored according to the AGADIR criterion. Our coarse-grained ab initio simulations reveal three-body correlations in which hydrophobic residues position to protect amide-carbonyl hydrogen bonds from attack by water, thus inducing the growth of the C-terminal helix and guiding the folding process. Similar correlations are also found in all-atom simulations with an implicit solvent model that accurately reproduces the results of simulations with explicit solvent molecules. The correlations establish a large-scale, many-body context that may be probed experimentally by introducing mutations of certain nonobvious residues that reside outside the native hydrophobic core but that are predicted to affect the folding rates and dynamics dramatically.