This is a phase 2 study to further evaluate the safety and efficacy of tasocitinib (CP-690,550) in the subjects with moderate to severe dry eye disease. Both subjective and objective clinical endpoints will be measured for a duration of 12-week treatment.

Inclusion Criteria:

• Males and females aged 18 years or older at time of consent
• Diagnosis of dry eye disease, characterized by subjective symptoms of dry eye for at least 6 months, Schirmer test without anesthesia: =>1 mm and =<7 mm, sum of corneal fluorescein staining score of =>4 (NEI Scale), and subject grading total score of => 23 on the OSDI

Exclusion Criteria:

• Planned initiation of, or changes to, concomitant medication that could affect dry eye within 30 days of the Screening visit or during study
• Ocular disorders that may confound interpretation of study results such as significant corneal surface disease not caused by dry eyes, abnormal corneal sensitivity, abnormal tear spreading, including but not limited to the following: abnormal lid function, lid position, or blink rate, that in the opinion of the investigator is clinically significant, history of herpetic keratopathy
• Lacrimal punctal occlusion (plugs or cautery) within 2 months of the Screening visit
• Contact lens wear within 2 weeks of the Screening visit and/or during study participation.