I really wanted to install Optifine for Minecraft 1.16.5 and can’t wait for the official release. These are the steps to install:

  1. Create new instance with Minecraft Version 1.16.5
  2. Install Fabric (Button locaated in the right hand side)
  3. Download Fabric API (Not sure if this is needed but I installed it anyway). You can find them here.
  4. In the loader mods, add the downloaded fabric api jar file.
  5. Download Optifine from here.
  6. Add it to the loader mods, the same as fabric api
  7. Download the custom optifabric here. If you’re curious on what was changed, you can find the updated repository here.
  8. Add the custom jar to the loader mod.
  9. And you’re done! Launch the game