Despite accumulating evidence indicating a key role of interferon-γ (IFN-γ)-producing immune cells in ocular infection and immunity, little is known about the direct effects of IFN-γ on resident corneal cells or on the ocular surface. Here, we report that IFN-γ impacts corneal stromal fibroblasts and epithelial cells to promote inflammation, opacification, and barrier disruption on the ocular surface, leading to dry eye. Our results demonstrated that IFN-γ dose-dependently induced cytotoxicity, pro-inflammatory cytokine/chemokine production, and expression of major histocompatibility complex class II and CD40 in cultures of corneal stromal fibroblasts and epithelial cells while increasing myofibroblast differentiation of corneal stromal fibroblasts. In mice, subconjunctival IFN-γ administration caused corneal epithelial defects and stromal opacity in dose- and time-dependent manners while promoting neutrophil infiltration and inflammatory cytokine expression in the cornea. Moreover, IFN-γ reduced aqueous tear secretion and the number of conjunctival goblet cells responsible for mucinous tear production. Together, our findings suggest that IFN-γ induces the ocular surface changes characteristic of dry eye disease at least in part through its direct effects on resident corneal cells.