Covalent modification of proteins with polyethylene glycol (PEG) has become a well established drug enhancement strategy in the biopharmaceutical industry. The general benefits of PEGylation, such as prolonged serum half-lives or reduced in vivo immunogenicity, are well known. To date, the PEGylation process has been performed with purified proteins, which often requires additional multi-step purification steps to harvest the desired PEGylate. However, it would be beneficial for bioprocessing if 'renaturation,' i.e. in vitro refolding and 'modification,' and PEGylation can be integrated, especially for inclusion body proteins. We investigated the feasibility of protein PEGylation under denaturing conditions and of protein refolding with the attached PEG molecule. Using lipase as a model protein, PEGylation occurred in 8 M urea and covalently attached PEG did not appear to hinder subsequent refolding.