Cytosine-rich DNA sequences fold into secondary structures called i-Motifs, which are usually stable at acidic pH. However, molecular crowding agents, such as poly(ethylene glycol) (PEG), are known to facilitate the formation of these structures even at neutral pH. As crowding mimics the intracellular environment and not much is known about the folding pathway of i-Motifs in such constrained media, we have probed, in detail, the conformational changes of a 22-mer c-MYC-promoter-based C-rich sequence (Py22) in the presence of PEG, employing Forster resonance energy transfer and fluorescence lifetime measurements at the single-molecule level. We find that the folding process is not a simple two-state transition between a random coil and a folded i-Motif structure. Rather, it involves a partially folded conformation as an intermediate in which the bases are not as efficiently stacked as in the completely folded i-Motif form. The relative population of each species is governed by the size and concentration of PEG, and 30% (w/w) PEG6000 is the optimum condition for the folding of Py22. Under this condition, similar to 80% of Py22 exists in the fully folded i-Motif form and similar to 20% of it is in the partially folded state.