The treatment of chronic pain is poorly managed by current analgesics, and there is a need for new classes of drugs. We recently developed a series of bioactive lipids that inhibit the human glycine transporter GlyT2 (SLC6A5) and provide analgesia in animal models of pain. Here, we have used functional analysis of mutant transporters combined with molecular dynamics simulations of lipid-transporter interactions to understand how these bioactive lipids interact with GlyT2. This study identifies a novel extracellular allosteric modulator site formed by a crevice between transmembrane domains 5, 7, and 8, and extracellular loop 4 of GlyT2. Knowledge of this site could be exploited further in the development of drugs to treat pain, and to identify other allosteric modulators of the SLC6 family of transporters.