Biocompatible hydrogels have great potentials in biomedical and biotechnological applications. In the current study, we reported a new naturally occurring protein motif that formed a transparent hydrogel when heated to 90 °C at a concentration as low as 0.4 mg/mL. The protein motif is the C-terminal soluble domain of an Escherichia coli inner membrane protein YajC (YajC-CT). We investigated the conformational change and self-assembly of the protein that lead to the formation of hydrogels using multiple methods. Atomic force microscopy studies of dilute gel samples revealed the presence of β-sheet-rich fibrils that were 2 to 3 nm in height and micrometers in length, which appeared to originate from homogeneous particles. On the basis of these observations, we proposed a three-step pathway of YajC-CT gelation. Hydrogels formed at different pH contained slightly different fibril structures. To our knowledge, this is the smallest hydrogel-forming globular protein module that has been characterized in detail. It may be useful as a model system in the elucidation of the mechanisms of protein fibrillation and gelation processes.