The present invention provides compositions and methods for identifying subjects suffering from dry eye that can be treated by topical administration of a composition comprising lacritin or a bioactive fragment thereof. The application discloses in part that a ˜90 KDa deglycanated form of syndecan-1 is abundant in tears of normal individuals but not individuals suffering from dry eye, whereas a ˜25 kDa syndecan-1 fragment is detectable in dry, but not normal tears.