Transmembrane peptides play important roles in many biological processes by interacting with lipid membranes. This study investigates how the transmembrane domain of the influenza A virus M2 protein, M2TM, affects the structure and mechanics of model lipid bilayers. Atomic force microscopy (AFM) imaging revealed small decreases in bilayer thickness with increasing peptide concentrations. AFM-based force spectroscopy experiments complemented by theoretical model analysis demonstrated significant decreases in bilayer's Young's modulus (E) and lateral area compressibility modulus (KA). This suggests that M2TM disrupts the cohesive interactions between neighboring lipid molecules, leading to a decrease in both the bilayer's resistance to indentation (E) and its ability to resist lateral compression/expansion (KA). The large decreases in bilayer elastic parameters (i.e., E and KA) contrast with small changes in bilayer thickness, implying that bilayer mechanics are not solely dictated by bilayer thickness in the presence of transmembrane peptides. The observed significant reduction in bilayer mechanical properties suggests a softening effect on the bilayer, potentially facilitating membrane curvature generation, a crucial step for M2-mediated viral budding. In parallel, our Raman spectroscopy revealed small but statistically significant changes in hydrocarbon chain vibrational dynamics, indicative of minor disordering in lipid chain conformation. Our findings provide useful insights into the complex interplay between transmembrane peptides and lipid bilayers, highlighting the significance of peptide-lipid interactions in modulating membrane structure, mechanics, and molecular dynamics.