PURPOSE. Dry eye is a major ocular pathology worldwide. Although dry eye is a multifactorial disease, recent studies have shown that chronic immunologic processes have a pivotal role in its pathogenesis, characterized by the infiltration of immune cells in the lacrimal glands, elevated levels of tear inflammatory cytokines, and increased density of immune cells in the cornea and conjunctiva. This review describes the recent advances in understanding the relationship between dry eye and inflammation. METHODS. This narrative review is based on searches of recent international literature using terms related to the immune response in dry eye, and includes clinical trials, animal experiments, and expert reviews. RESULTS. Although dry eye presents clinically as tear film instability associated with corneal/ conjunctival epithelial disorders, Meibomian gland dysfunction, and decreased visual function, recent laboratory and clinical studies have indicated inflammation in the lacrimal glands, Meibomian glands, conjunctiva, cornea, and aqueous tears. Furthermore, inflammation at these locations leads to conjunctival goblet cell apoptosis, corneal epithelial barrier disruption, and corneal nerve damage. These inflammatory outcomes can be exacerbated by intrinsic and extrinsic factors, such as aging, sex steroid hormone, autoimmune diseases, contact lens use, visual display terminals, and dry environment. CONCLUSIONS. Recent advances in dry eye research have revealed the inflammatory process and its pathogenesis, which has been proposed as an ''inflammatory vicious cycle'' of dry eye. Comprehensive assessment of dry eye based on inflammation will improve the selection of treatments and help break the inflammatory cycle in clinical settings.