P-glycoprotein (Pgp) is a major efflux pump in humans, overexpressed in a variety of cancers and associated with the development of multi-drug resistance. Allosteric modulation induced by binding of various ligands (e.g., transport substrates, inhibitors, and ATP) has been bio-chemically shown to directly influence the function of Pgp. However, the molecular details of such effects are not well established. In particular, the role and involvement of the surrounding lipid environment on ligand-induced modulation of the conformational dynamics of the transporter have not been investigated at any level. Here, we employ all-atom molecular dynamics (MD) simulations to study the conformational landscape of Pgp in the presence of a high-affinity, third-generation inhibitor, tariquidar, in comparison to the nucleotide-free (APO) and the ATP-bound states, in order to shed light on and to characterize how the inhibitor blocks the function of the transporter. Simulations in a multi-component lipid bilayer show a dynamic equilibrium between open and closed inward-facing (IF) conformations in the APO-state, with binding of ATP shifting the equilibrium towards conformations feasible for ATP hydrolysis and subsequent completion of the transport cycle. In the presence of the inhibitor bound to the drug-binding pocket in the transmembrane domain (TMD), the transporter samples more open IF conformations, and the nucleotide binding domains (NBDs) are observed to become highly dynamic. Interestingly, and reproduced in multiple independent simulations, the inhibitor is observed to recruit lipid molecules into the Pgp lumen through the two proposed drug-entry portals, where the lipid head groups from the lower leaflet translocate inside the TMD, while the lipids tails remain extended into the bulk lipid environment. These “wedge-lipid” molecules likely enhance the inhibitor-induced conformational changes in the TMD leading to the differential modulation of coupling pathways observed with the NBDs downstream. We suggest a novel inhibitory mechanism for tariquidar, and for related third-generation Pgp inhibitors, where lipids are seen to enhance the inhibitory role in the catalytic cycle of membrane transporters.