Melittin, a small peptide found in bee venom, is known to induce membrane lysis. A molecular dynamics simulation of melittin embedded in a hydrated dipalmitoylphosphatidylcholine bilayer is analyzed in order to study the peptide's effect on water molecules at the membrane/water interface. The peptide, with a protonated N-terminus, was embedded in a trans-bilayer orientation. The simulation highlights the microscopic mechanism by which melittin induces the formation of transmembrane water "pores,'' leading to membrane lysis. It was found that melittin has a profound effect on the behavior of the water molecules at the membrane/water interface. It modifies the orientation of the water dipoles and induces water penetration into the bilayer. In fact, melittin's residue Lys-7 and its protonated N-terminus facilitate the formation of transmembrane water pores by steering water penetration from both sides of the bilayer. The initial step towards pore formation takes about 200 ps, and the process relays on melittin's bent conformation and tilted orientation. A large body of experimental observations supports the simulation results and the suggested microscopic mechanism.