Dry eye can damage the ocular surface and result in mild corneal epithelial defect to blinding corneal pannus formation and squamous metaplasia. Significant progress in the treatment of dry eye has been made in the last two decades; progressing from lubricating and hydrating the ocular surface with artificial tear to stimulating tear secretion; anti-inflammation and immune regulation. With the increase in knowledge regarding the pathophysiology of dry eye, we propose in this review the concept of ocular surface microenvironment. Various components of the microenvironment contribute to the homeostasis of ocular surface. Compromise in one or more components can result in homeostasis disruption of ocular surface leading to dry eye disease. Complete evaluation of the microenvironment component changes in dry eye patients will not only lead to appropriate diagnosis, but also guide in timely and effective clinical management. Successful treatment of dry eye should be aimed to restore the homeostasis of the ocular surface microenvironment.