BamA, the most essential component of the beta-Barrel Assembly Machinery, is a highly conserved outer membrane protein of diderms that assembles nascent β-barrel proteins in the bacterial outer membrane.[1,2] Being accessible from the environment, and indispensable for the bacterium has made BamA a lucrative target for developing small molecule inhibitors against multidrug–resistant pathogens.[3] The structures of microstates formed during BamA folding, and intrinsic features regulating lipid–dependent BamA stability – both of which would aid in selectively targeting the most susceptible areas of the protein for structure–based drug design – are not yet characterized. Here, using a comprehensive library of Escherichia coli BamA Ala variants, we deduce the transition state structures and end-state thermodynamic stability in phoshaptidylethanolamine (PE) and phosphatidylglycerol (PG) containing host–guest membranes. Thermodynamic measurements reveal intrinsic high stability of the C-terminal strands which function to anchor the barrel to the bilayer. The stability is enhanced in PG, indicating metastable BamA is a pre-requisite for optimal function in the PE–rich outer membrane. All-atom molecular dynamics simulations in both membranes additionally support these findings. Evaluation of the transition state show the formation of native–like intermediate structures that accumulate through parallel folding pathways in both lipids. While PE–rich membranes transiently inhibit folding by promoting non-native interactions, PG–rich membranes favor a C-to-N assembly mechanism, as is expected to occur in vivo. We also identify the insertion of strands β5–β8 and assembly of loop 4 as obligatory late-assembly events in BamA folding. We deduce the occurrence of stability–function trade-off, lipid–controlled folding intermediates, and intrinsically high dynamics (and lowered stability) of the N-terminal β-strands, in BamA. Based on our findings, we propose designer peptidomimetics that selectively target BamA N-terminus and loop 4, as highly effective next-generation antibiotics against Gram-negative pathogens.