A 4-year-old, female, spayed, Labrador retriever was presented with a painless swelling of the left ventromedial eyelid and epiphora of 3 months duration. Bilateral patency of the nasolacrimal system was confirmed by the appearance of fluorescein dye at both nares. Ultrasonography revealed a well-demarcated fluid-filled structure containing echogenic ill-defined material in close proximity to the nasolacrimal system. A transconjunctival surgical approach confirmed the close anatomical proximity of the cyst and the absence of a communication with the inferior canaliculus. The cyst contained multiple intraluminal calculi (dacryoliths). Following surgical excision of the cyst, the epiphora resolved and no recurrence was noted over a 12-month follow-up period. On histopathology, the cystic structure was lined by stratified squamous epithelium, consistent with lacrimal canaliculus epithelium. Presumed progression of a canalicular diverticulum to a cyst with the formation of intraluminal dacryoliths was suspected. Mineral analysis of the dacryoliths revealed a calcium carbonate composition.