Diabetes mellitus is a prevalent disease that is often accompanied by ocular surface abnormalities including delayed epithelial wound healing and decreased corneal sensitivity. The impact of diabetes on the lacrimal functional unit (LFU) and the structures responsible for maintaining tear homeostasis, is not completely known. It has been shown that the Opioid Growth Factor Receptor (OGFr), and its ligand, Opioid Growth Factor (OGF), is dysregulated in the ocular surface of diabetic rats leading to overproduction of the inhibitory growth peptide OGF. The opioid antagonist naltrexone hydrochloride (NTX) blocks the OGF-OGFr pathway, and complete blockade following systemic or topical treatment with NTX restores the rate of re-epithelialization of corneal epithelial wounds, normalizes corneal sensitivity, and reverses dry eye in diabetic animal models. These effects occur rapidly and within days of initiating treatment. The present study was designed to understand mechanisms related to the fast reversal (<5 days) of dry eye by NTX in type 1 diabetes (T1D) by investigating dysregulation of the LFU. The approach involved examination of the morphology of the LFU before and after NTX treatment. Male and female adult Sprague-Dawley rats were rendered hyperglycemic with streptozotocin, and after 6 weeks rats were considered to be a T1D model. Rats received topical NTX twice daily to one eye for 10 days. During the period of treatment, tear production and corneal sensitivity were recorded. On day 11, animals were euthanized and orbital tissues including conjunctiva, eyelids, and lacrimal glands, were removed and processed for histologic examination including immunohistochemistry. Male and female T1D rats had significantly decreased tear production and corneal insensitivity, significantly decreased number and size of lacrimal gland acini, decreased expression of aquaporin-5 (AQP5) protein and decreased goblet cell size. Thus, 10 days of NTX treatment restored tear production and corneal sensitivity to normal values, increased AQP5 expression, and restored the surface area of goblet cells to normal. NTX had no effect on the number of lacrimal gland acini or the number of conjunctival goblet cells. In summary, blockade of the OGF-OGFr pathway with NTX reversed corneal and lacrimal gland complications and restored some components of tear homeostasis confirming the efficacy of topical NTX as a treatment for ocular defects in diabetes.