Parasitic nematodes cause significant morbidity and mortality to humans. Much of their ability to successfully infect their hosts is due to the variety of excreted/ secreted proteins (ESPs) they release into host tissues, and their ability to evade or suppress host immunity, yet little is known about the mechanisms behind these interactions. This work identifies and characterizes two ESPs that display immunomodulatory activity in the model host Drosophila melanogaster. The fatty acid- and retinol- binding (FAR) proteins and the secreted phospholipase A2 (sPLA2) enzyme from the entomopathogenic nematode Steinernema carpocapsae likely elicit their detrimental effects by preventing essential immune lipid signaling in the fly. The FAR proteins bind to fatty acids and retinol and alter the in vivo availability of lipids in the fly hemolymph. They also function to suppress phenoloxidase activity and antimicrobial peptide production, both of which are essential in the fly’s ability to resist bacterial infections. In contrast, the sPLA2 enzyme cleaves lipids directly from the membrane and shows specific immunomodulatory effects on toll signaling and phagocytosis. Overall analysis of fly hemolymph post infection revealed several lipids that are depleted and are also able to rescue to course of infection. This work identifies lipids and prostaglandins that significantly improve the outcome of infection, furthering our understanding of the role of lipids and eicosanoids in Drosophila immunity.