This paper reviews current knowledge of the pathophysiology of dry eye and predicts that the clinical picture in late disease differs in both severity and quality from that in early disease. It is hypothesized that hybrid forms evolve, in which aqueous-deficient dry eye (ADDE) takes on features of evaporative dry eye (EDE) and vice versa. As a consequence, early and late forms may require different diagnostic criteria and respond to different therapeutic regimes. Tear hyperosmolarity plays a key role in the damage mechanism of dry eye, and ADDE is recognized to be a low-volume, hyperosmolar state. As ADDE advances, a progressive decrease in lacrimal secretion occurs, exacerbated by loss of the corneal reflex. This causes a decrease in tear volume, thinning of the aqueous tear film, and retarded spreading of the tear film lipid layer. The latter is hypothesized to cause an increase in evaporative water loss and an added evaporative component to the dry eye. Thus, in advanced disease, the hybrid state would be an organic ADDE, accompanied by a functional EDE in the absence of meibomian gland dysfunction. This functional EDE would respond to agents that expand the tear volume, restore corneal sensitivity, or provide an artificial tear film lipid layer.