Molecular dynamics simulations of a lipid monolayer at a water-air interface are used to investigate the dipole potential that arises at the water-lipid interface. One simulation explicitly accounts for many-body polarization effects by using a model based on classical Drude oscillators. The dipole potential of the Drude model monolayer is 0.35V in excellent agreement with experimental estimates that range between 0.3 and 0.4V, whereas, a simulation using a nonpolarizable model significantly overestimates the potential with a calculated value of 0.8V. Induced polarization effects in the nonpolar region of the monolayer are found to buffer the residual positive lipid potential that results from competing polarization effects at the polar water/monolayer interface. These results, indicate the utility of the inclusion of many-body polarization effects in empirical force field models of lipids.