Dry eye syndrome (DES), a multifactorial disorder which leads to ocular discomfort, visual disturbance and tear film instability, has a rising prevalence and limited treatment options. In this study, a newly developed trypsin-like serine protease inhibitor (UAMC-00050) in a tear drop formulation was evaluated to treat ocular inflammation. A surgical animal model of dry eye was employed to investigate the potential of UAMC-00050 on dry eye pathology. Animals treated with UAMC-00050 displayed a significant reduction in ocular surface damage after evaluation with sodium fluorescein, compared to untreated, vehicle treated and cyclosporine-treated animals. The concentrations of IL-1α and TNF-α were also significantly reduced in tear fluid from UAMC-00050-treated rats. Additionally, inflammatory cell infiltration in the palpebral conjunctiva (CD3 and CD45), was substantially reduced. An accumulation of pro-MMP-9 and a decrease in active MMP-9 were found in tear fluid from animals treated with UAMC-00050, suggesting that trypsin-like serine proteases play a role in activating MMP-9 in ocular inflammation in this animal model. Comparative qRT-PCR analyses on ocular tissue indicated the upregulation of tryptase, urokinase plasminogen activator receptor (uPAR) and protease-activated receptor 2 (PAR2). The developed UAMC-00050 formulation was stable up to 6 months at room temperature in the absence of light, non-irritating and sterile with compatible pH and osmolarity. These results provide a proof-of-concept for the in vivo modifying potential of UAMC-00050 on dry eye pathology and suggest a central role of trypsin-like serine proteases and PAR2 in dry eye derived ocular inflammation.