Fullerene and its derivatives with different surface chemistry have great potential in biomedical applications. Accordingly, it is important to delineate the impact of these carbon-based nanoparticles on protein structure, dynamics, and subsequently function. Here, we focused on the effect of hydroxylation - a common strategy for solubilizing and functionalizing fullerene - on protein-nanoparticle interactions using a model protein, ubiquitin. We applied a set of complementary computational modeling methods, including docking and molecular dynamics simulations with both explicit and implicit solvent, to illustrate the impact of hydroxylated fullerenes on the structure and dynamics of ubiquitin. We found that all derivatives bound to the model protein. Specifically, the more hydrophilic nanoparticles with a higher number of hydroxyl groups bound to the surface of the protein via hydrogen bonds, which stabilized the protein without inducing large conformational changes in the protein structure. In contrast, fullerene derivatives with a smaller number of hydroxyl groups buried their hydrophobic surface inside the protein, thereby causing protein denaturation. Overall, our results revealed a distinct role of surface chemistry on nanoparticle-protein binding and binding-induced protein misfolding.