Gpr125, encoded by Adgra3, is an orphan adhesion G-protein coupled receptor (aGPCR) implicated in Wnt signaling and planar polarity. Here we establish both physiological and pathological roles for Gpr125. We show that mice lacking Gpr125 display an ocular phenotype with many hallmarks of human dry eye disease. These include squinting, abnormal lacrimation, mucus accumulation, swollen eyelids and inflammatory infiltration of lacrimal and meibomian glands. We further demonstrate that mice expressing Gpr125 lacking six transmembrane and the cytoplasmic domain recapitulate the null phenotype, indicating that downstream signaling is essential. Utilizing a Gpr125-β-gal reporter and scRNAseq, we identify Gpr125 expression in a discrete population of embryonic myoepithelial cells located at the tips of developing lacrimal ducts. By lineage tracing we show these cells function as progenitors of the adult lacrimal myoepithelium. Beyond defining an essential role for Gpr125 in tear film and identifying its utility as a marker of lacrimal progenitors, this study implicates Gpr125 in the etiology of dry eye disease, and defines novel animal models of this common malady.