Establishment of interactions with the envelope lipids is a cardinal feature of broadly neutralizing antibodies (bnAbs) that recognize the Env membrane-proximal external region (MPER) of HIV. The lipid envelope constitutes a relevant component of the full "quinary" MPER epitope, and thus antibodies may be optimized through engineering their capacity to interact with lipids. However, the role of the chemically complex lipid nanoenvironment in the mechanism of MPER molecular recognition and viral neutralization remains poorly understood. To approach this issue, we computationally and experimentally investigated lipid interactions of broadly neutralizing antibody 10E8 and optimized versions engineered to enhance their epitope and membrane affinity by grafting bulky aromatic compounds. Our data revealed a correlation between neutralization potency and the establishment of favorable interactions with small headgroup lipids cholesterol and phosphatidylethanolamine, evolving after specific engagement with MPER. Molecular dynamics simulations of chemically modified Fabs in complex with an MPER-Transmembrane Domain helix supported the generation of a nanoenvironment causing localized deformation of the thick, rigid viral membrane and identified sphingomyelin preferentially occupying a phospholipid-binding site of 10E8. Together, these interactions appear to facilitate insertion of the Fabs through their engagement with the MPER epitope. These findings implicate individual lipid molecules in the neutralization function of MPER bnAbs, validate targeted chemical modification as a method to optimize MPER antibodies, and suggest pathways for MPER peptide-liposome vaccine development.